India Inc against rate hikes, asks RBI not to tighten policy

India Inc today asked the Reserve Bank to refrain from further tightening of key short-term rates at its monetary policy review next month, pointing out that high interest on loans is pushing up project costs.

"Liquidity is tight... I think it would be desirable to pause for a little while before we take any further steps and I think the current situation warrants a pause," Larsen and Toubro Chief Financial Officer Y M Deosthalee told PTI after meeting the RBI top brass.

The RBI has hiked the key rates at which it lends to (repo) and borrows from banks (reverse repo) five times this year as the ripples caused by the global economic slowdown died out and headline inflation numbers kept increasing.

The apex bank says the calibrated hikes are a part of its efforts to tame inflation and are necessary as the economic climate normalises. It is widely speculated that the RBI will hike the key lending and borrowing rates by 0.25 per cent each at its next policy review.

Rate hikes by the RBI have a direct impact on interest rates offered by banks on loans and the industry wants the central bank to maintain the rates at the same level or reduce them so that the cost of funding projects is brought down.

The RBI will hold its next quarterly monetary policy review on November 2 and senior officials today elicited views from trade bodies, corporates and rating agencies for the same.