Views on Monetary Policy: Tata Capital II Muthoot Finance II ICICI Securities II Yes Bank

Rajiv Sabharwal, MD & CEO, Tata Capital Ltd. 
·  In line with the market expectations, RBI has maintained its status quo on rates and reaffirmed its withdrawal policy stance. This shows RBI’s resolve to support durable growth. This will accelerate the growth momentum in the economy
· This holistic perspective reflects the RBI's commitment to ensuring a sustainable balance between growth and inflation, which is crucial for the long-term health of the economy 
· RBI continues to offer assurance to the markets that there will be a rebalance in the overall systemic liquidity.

George Alexander Muthoot, MD, Muthoot Finance
 
“The RBI commentary in today’s monetary policy was fairly optimistic on the resilience of Indian economy growth. On expected lines, the RBI MPC continued to maintain status quo on repo rate, and maintained its focus on the withdrawal of accommodation. The MPC further retained the GDP projection at 6.5% and set the target to achieve 4% inflation going forward, reflecting a cautiously optimistic outlook for the economy, while also continuing to remain vigilant on the inflation front. Indian economy remains resilient as indicated by the high frequency indicators, domestic demand conditions, improving household consumption and investment activity. Muthoot Finance recorded highest-ever quarterly gold loan disbursement in Q4FY23 and as Indian economic growth picks up, we continue to remain positive on gold loan demand. Strong urban demand, higher rabi production, and improving rural demand further add to our optimism on growth.
We welcome the RBI proposal of widening the Scope of Prudential Framework for Stressed Assets to all regulated entities and streamline the current prudential norms regarding the restructuring of borrower accounts impacted by natural disasters.
Recently, the RBI committee led by Shri. B.P. Kanungo proposed guidelines on gold loan recovery in case of borrower’s death which we believe is a much-needed framework for uniformity and clarity in the industry, ensuring a fair and transparent process that protects both the interests of customers and the integrity of the lending system, these steps towards customer service standards will enhance confidence in the gold loan sector, establishing a reliable and customer-centric approach that safeguards the trust of our stakeholders.”

Prasenjit Basu – Chief Economist, ICICI Securities 

“No surprise that the MPC has left interest rates unchanged. We expect CPI inflation to remain below 5% for several months, and the “withdrawal of accommodation” stance to be altered by August. The next policy move is likely to be a rate cut once it’s clear that the inflation fight has been won decisively.”

Indranil Pan - Chief Economist, YES BANK.
 
“There was nothing in the policy that was not expected by the market, rates and the stance both were unchanged. However, the communication, in my opinion, was slightly on the hawkish side with respect to inflation. Even as there was a 10 bps reduction in the inflation forecast for FY24, the governor was extremely pointed in highlighting that the MPC is now focused on getting inflation down to the 4% central line, rather than being comfortable with the fact that headline inflation is currently within the tolerance band and is likely to remain so for the rest of FY24. The governor also pointed out that in H2FY24, the inflation is expected to be higher, averaging at around 5.3%, and a much closer look on the inflation at that point is warranted as by then any negative impact from the El Nino will be clear. Currently, the RBI has assumed a normal monsoon in the inflation projections. The communication in this policy settles the fact that one should not expect any change (read reduction) in the policy rate soon, may be even through the rest of FY24”.