Nagpur Biz Community hails RBI’s repo rate cut; calls it a 'pleasant surprise'

Nagpur: Reserve Bank of India (RBI) Governor Raghuram Rajan surprised market analysts on Tuesday by reducing repo rate by 50 basis points to 6.75 per cent from 7.25 per cent earlier. The RBI had kept its benchmark lending rate viz. the repo rate unchanged at 7.25 per cent in its August 4 monetary policy review.This time majority of participants were hoping for 25 basis points cut in key lending rate on the back of cooling inflation and status quo by US Fed, which has given room for the RBI to cut short-term lending (repo) rate in its fourth bi-monthly monetary policy review on Tuesday. Back in Nagpur the dignitaries from business community hailed RBI’s decision and said it would help in bringing back the economy on track.

Nagpur Today explores the mood of city business community over RBI’s decision.

Managing Director of Manmohan Minerals Limited Ritesh Singhania opined that the cut in the repo rate is a good move by the government. Looking at the current Economic situation and the slow down, this move of the government will reduce the interest rates. The reduction in the repo rate will also boost the economy and kick off development of the country as envisioned by Prime Minister Narendra Modi.

Managing Director of Sanvijay Rolling and Engineering Limited Ajay Agrawal said that this is reduction in repo rate is definitely a good move of the government. However, he said that reduction in repo rate will hold good only when the banks incorporate the repo rate and reduce the interest rates. It has been observed that the banks do not pass on these benefits to the businessmen and traders in the past.

Partner in Ethnic Securities Piyush Daga opined that the reduction of repo rate is a good move by RBI. This reduction in repo rate will help the banks to reduce their lending rates. This in-turn will help the industries to reduce their costs. He opined that this will help in boosting the liquidity in the market which will act as a stimulus to help in revival of the market. This can be seen as a sign that the interest rates will come down in near future.

Managing Director of Madhuban Realties and Sairaj Petroleum Hitesh Kering said that the kind of economy we are into right now, the reduction of repo rate is a good move. He opined that we are in need of a lot of cash flow in the system and the 50 basis cut that the Governor of RBI has made will ensure that there is enough liquidity in the system. I guess such systems are needed to cross the 7% Gross Domestic Product (GDP).

Much beyond expectation: CAIT

The Confederation of All India Traders CAIT) while appreciating reduction of 50 basis point in repo rate by Reserve Bank of India on September 29, 2015, have termed it as a bold decision of RBI Governor Raghuram Rajan since trade and industry was expecting a cut of only 25 basis point. The reduction of 50 basis point in repo rate will bring reduction in interest rate of Banks which in turn will make EMI low and low cost of borrowing benefiting all sectors including Real Estate, Automobile, Retail etc.

National President of Confederation of All India Traders (CAIT) B.C.Bhartia and Secretary General of Confederation of All India Traders Praveen Khandelwal while complimenting Union Finance Minister Arun Jaitley for impressing upon RBI to make impressive cut in repo rates said that it was long awaited demand of trade and industry including CAIT which has exceeded the expectations. However, there is no change in CRR and SLR.

Though now it is expected that interest rates will come down but liquidity crunch in the market is expected to continue.Both Bhartia and Khandelwal demanded that pursuant to reduction in repo rates, the Banks should immediately announce reduction in interest rates. They have also demanded that the RBI should immediately direct all Banks to cut down their respective interest rates. It will pave way for more opportunities for Prime Minister’s “make in India” vision to convert into reality since lower borrowings will increase availability of funds with individuals which will certainly exhilarate the spending and economy shall stand benefitted.