Bankers say door open for more easing from RBI

Mumbai, Dec 5 (PTI) Bankers said the RBI's 0.25 per cent rate cut on Friday leaves the door open for further easing to help strengthen the GDP growth for longer.

"The decision to cut rates while keeping the door open for future easing helps buffer the economy against potential unexpected shocks or external headwinds," C S Setty, the chairman of largest lender SBI, who also chairs the industry lobby grouping IBA, said in a statement.

Setty added that the rate cut, neutral stance, and targeted liquidity interventions aim to sustain economic momentum while safeguarding price and financial stability.

Overall, the policy delivered a "clear and confident message" that the Indian economy remains on strong footing, with robust growth accompanied by comfortably low inflation.

Banks have had a challenging year due to the RBI's previous rate cuts, their net interest margins (NIMs) have narrowed, impacting their core incomes. However, an argument also goes that the lending rate may induce more people to borrow and the higher volumes may help banks make up for the losses.

State-run Indian Overseas Bank's Managing Director and Chief Executive Ajay Kumar Srivastava said the policy review supports growth.

"The rate cut is expected to ease borrowing costs, spur demand in housing and real estate, support MSMEs and sustain personal and auto loan growth," he added.

The IOB head also welcomed the RBI's two-month drive beginning January 1 to address pending ombudsman complaints, which will further strengthen customer service across the banking system.

Among the foreign lenders, Standard Chartered Bank's Chief Executive for India and south Asia P D Singh said the rate cut is backed by confidence around economic growth and well controlled inflation.

"The announcement of solid and timely liquidity measures to the tune of Rs 1.45 lakh crore by way of G-sec open market operation (OMO) purchases and forex swaps, along with the recent GST cuts, augur well for economic activity in the coming quarters," Singh said.

In the non-banks space, LIC Housing Finance's MD and CEO Tribhuwan Adhikari said the RBI move will provide further relief to the homebuyers and the company anticipates a positive growth in the affordable and mid-segment housing in the upcoming quarters.

Rajiv Anand, who is now leading IndusInd Bank, said the six-member rate setting panel has used the space for easing created by CPI inflation slipping to a record low, supported by a generalised decline across key constituents.

SVC Bank's MD Ravinder Singh said the rate cut and liquidity infusions create a real opportunity and cheaper credit can be made available for borrowers. PTI AA TRB