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.
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.