RBIs Repo Rate Decision Boosts Credit Growth and Economic Stability, Experts Say

New Delhi, April 8: The Reserve Bank of India’s decision to maintain the repo rate at 5.25% is expected to support the ongoing economic recovery, enhance credit growth, and stabilize borrowing costs. Economists and bankers shared these insights on Wednesday.

Ajay Kumar Srivastava, MD and CEO of Indian Overseas Bank, stated that the central bank’s decision reflects a balanced and ‘safety-first’ approach, prioritizing macroeconomic stability. He also praised the RBI’s focus on easing the business environment for the MSME sector.

He noted that removing the due diligence requirement for onboarding on the TReDS platform is a positive step, facilitating easier access to liquidity and working capital for small businesses.

Vinod Francis, SGM and CFO of South Indian Bank, commented, “Keeping interest rates stable in the current scenario provides necessary stability to the financial system, considering the rising inflation risks.”

He further added that a stable interest rate environment, coupled with adequate liquidity, will boost loan demand in the retail and MSME sectors and strengthen banks’ asset-liability management.

Shreenivasan Vaidyanathan, Operating Partner at Essar Capital, remarked that the RBI’s decision aligns with expectations and indicates the central bank’s intent to balance growth with inflation control.

He emphasized that the RBI is also focused on preventing excessive depreciation of the rupee amid global instability, which is crucial for economic stability.

Tribhuwan Adhikari, MD and CEO of LIC Housing Finance, mentioned that stable interest rates will make borrowing easier, especially for affordable and middle-income homebuyers.

Additionally, Deepti Deshpande, Principal Economist at Crisil Limited, stated that government measures have somewhat controlled the impact of energy costs, keeping retail inflation pressures limited.

Prashant Vashisth, Senior Vice President and Co-Group Head of Corporate Ratings at ICRA Limited, noted that while it may take time for crude oil and petroleum product supplies to normalize post-ceasefire, the gradual resumption of supply will alleviate the current shortages.