Bankers here on Wednesday termed the 35 bps repo rate cut by the Reserve Bank of India (RBI) as “pleasant surprise” and “unconventional”. The apex bank slashed the repo rate for the fourth time in a row by an unprecedented 35 bps to cushion the rising headwinds to growth amidst softer inflation, and also lowered its growth forecast for the year by 10 bps to 6.9 percent.
“The rate cut was expected, but an unconventional 35 bps rate cut indicates that RBI is focused on creating impetus for growth in economy and also give more room to banks for rate transmission,” Allahabad Bank MD and CEO S S Mallikarjuna Rao said.
Rao also said the unchanged policy stance is an indication that the central bank “may not hesitate to go for another round of rate cut in the current fiscal, if the economy demands”.
“We were expecting a 25 bps cut. Clearly, the repo rate cut by 35 bps cut is a pleasant surprise though the question still remains how much the bankers would be able to pass the benefits onto the borrowers,” United Bank of India MD and CEO Ashok Kumar Pradhan told PTI.
Banks have passed on only a little more than a third of the benefits they have accrued so far from the past three successive rate reductions of 75 bps by the central bank to the borrowers, RBI Governor Shaktikanta Das said, urging them to do more.
Bandhan Bank MD and CEO C S Ghosh said the “unorthodox 35 bps cut in the repo rate came as pleasant surprise”.
“The rate cut is expected to foster credit growth especially for the NBFCs,” he said.