Mumbai: Home loan and personal loan borrowers will have to wait a little longer for cheaper loans as RBI governor Dr. Raghuram Rajan left the key policy rates untouched. In a surprise announcement in his third bi-monthly monetary policy statement on Tuesday, he cut the statutory liquidity ratio rate by half a per cent and clarified that it is meant to give headroom for banks to increase lending when the economy turns around. Some analysts were flummoxed at the SLR cut as banks currently hold SLR securities to the tune of 29 per cent. So this would not have any immediate impact on the banks balance sheet.
Indranil Pan, chief economist, Kotak Mahindra Bank Limited said, “The communication in this policy is decidedly more hawkish than what the market would have liked. The RBI is very clearly placing in front of the markets the need to remain focused on the glide path of inflation that also encompasses the medium term inflation goal of 6 per cent by January 201.”
Dr Rajan expressed confidence in prospects of reinvigoration of modest growth and said if the increasing exports, pick-up in industrial activity, fiscal targets and reduction in current account deficits are sustained one could see a revival of investments and unlocking of stalled projects that could make the 5-6 per cent GDP growth target for 2014-15 achievable.
The governor however ring fenced the growth picture with repeated references to the upside risks shadowing the medium-term inflation path and specially the target of 6 per cent by January 2016.
He observed that though the retail inflation eased for the second month in June the higher prices of vegetables, fruits and protein-based food items were offset by muted increase in prices of non-food items. However with some concern about the certainty of the path of the monsoon “it would be premature to conclude that future food inflation and its spill over to broader inflation cannot be discounted,” he said.
