Business Standard Jury

Janaki Ballabh

Chairman and Managing Director, State Bank of India

Rating: 9/10

The credit policy addresses the expectations of various segments in a balanced manner. The bank rate cut has given a clear signal in the requirement to softer trend in lending rates. The CRR reduction will not only improve liquidity but also help improve banks' earnings.

It will help increase lendable resources, while the increase in the interest rate payable on CRR balances will help improve the profitability of banks.

The governor is cautious about further softening of lending rates. Banks will have to address issues in transaction cost and other operating costs to balance the requirement of profitability.

Shailendra Bhandari

Country Head, Prudential ICICI Mutual Fund

Rating: 8/10

The credit policy has far surpassed expectations and one has to appreciate that RBI governor Bimal Jalan has done whatever he could provide within the constraints. The pragmatic approach clearly stands out in his acceptance of 5-6 per cent growth rate which is good compared to global economic slowdown . The higher liquidity which has been released through the CRR cut will provide monetary stimulus to the economy. The cut in bank rate will signal banks to lower lending rates. However, as Jalan has stated that there is limit to reduction of lending rates by banks, I expect it to have positive impact in a longer time period if not overnight.

Jaspal Bindra

Country Head, Standard Chartered Group (India & Nepal)

Rating: 9/10

Overall, the monetary and credit policy was very positive. It is forward looking and is in line to promote growth in both short-term and long-term. It is encouraging to note that Jalan has continued his emphasis on adopting international best practice standards on many fronts.

Even though, in some areas this direction will create pain, it is in the long-term interests of the banking industry. The cut in the bank rate was withing the bankers' expectations, but the CRR cut exceeded it.

Deepak Parekh

Chairman, HDFC

Rating: 7.5/10

It is a very positive and forward looking policy. The Reserve Bank of India has taken a bold move by cutting down the banks' cash reserve ratio (CRR) by two percentage points.

In effect, it translates into a 80 basis points cut since the CRR base is restructured, but on paper it looks a wide cut and infuses Rs 8,000 crore in the system. It will increase banks' profitability. Now we must ensure that the banks are cutting their prime lending rate.

Normally, they cut their short term rates but the real prime lending rate (PLR) remains untouched. Hence, corporates don't get the benefit. The benefit of the rate cut must reach the industry as well as the retail consumers.

Harsh Goenka

Chairman, RPG Enterprises

Rating: 8/10

It is heartening to see that the RBI has walked the talk. The easing of the bank rate has continued in an incremental manner while the cut in CRR has exceeded expectations. Both the consumer and the industry would now hope that these will soon be translated into cheaper credit for them, thereby strengthening aggregate demand.

The need of the hour is to rejuvenate consumer demand, which can then have a beneficial multiplier effect. What is also heartening is the fact that the banks have been given more freedom to structure their cash credit portfolio with their corporate clients. This, I am sure, will herald the beginning of greater freedom to the banks to conduct their affairs in their best interest.

Habil Khorakiwala

Chairman and Managing Director, Wockhardt Ltd

Rating: 8/10

The 0.5 per cent cut in bank rate is a welcome move but a one percentage point cut was expected as it would have helped the economy. The cut in cash reserve ratio was a surprise. It should release about Rs 6,000 crore of liquidity.

The Centre should also streamline some of the policies which would boost investment in infrastructure. Foreign trade inflows will now come through a single channel instead of multiple channels, under the universal banking measures. This is in line with global practices and is a welcome step. Companies can now continue to look into various other flexible short-term borrowings with the introduction of flexible lending systems.

Hemendra Kothari

Chairman, DSP Merill Lynch

Rating: 8/10

The policy has delivered good news. It's positive for the economy, the banking system and the fixed income markets. Lower interest rates coupled with ample liquidity can aid industrial recovery. A lower CRR and higher interest on CRR balances will help banks lower the cost of funds and earn higher returns.

The fixed income markets have responded positively. Short-term deposit and lending rates will not move lower much. The medium term rates will decline in tune with the long-term impact. We also hope that rate on small savings, PF, will align. The measures will have a positive impact on the equity markets.

G N Bajpai

Chairman, LIC

Rating: 8/10

The Reserve Bank of India has taken very pragmatic measures which will help bring down the prime lending rate and thereby boost industry and the economy. The substantial reduction in the CRR will help the balance sheet of banks and improve liquidity.

Together, they will help augment resources available in the banking system. Life insurance products will find increasing favour as returns will be comparatively higher than other financial products in the market. We will relook at our assured return products in light of a downslide in interest rates. So far as declaration of bonus is concerned, this will depend upon yields on investments.

We intend to leverage on our investment capabilities and supplement reduction in yields with trading activities in the secondary market. The reduction in the market will have a positive impact on the stock market.

Rahul Bajaj

Chairman, Bajaj Auto

Rating: 8/10

The RBI's decision to cut the cash reserve ratio is most welcome. This should infuse additional funds into the system. Though liquidity was not a problem even earlier, the industry was concerned with the relative rate cuts in India which were lower than other major economies.

On the other hand, I do not suppose it to be a viable proposition for financial institutions such as ICICI and the Industrial Development Bank of India to become universal banks as it is not going to be a panacea for all their ills. The apex bank must ensure that their shift to universal banks will not transfer all their existing liabilities.

P P Vora

Chairman and Managing Director, IDBI

Rating: 8/10

It is an absolutely positive policy. The cut in the bank rate and the cash reserve ratio will jointly take care of softening the interest rates. There will be a sharper decline in the short-term and medium-term interest rates. Further, the reductions will help align the financial sector with the real rate of interest (adjusting to the rate of inflation).

This works out better for the corporate borrower and is welcome by the capital market. Moreover, the RBI is finalising the roadmap for retail participation in government securities. This will help deepen the market.

Overall: 8.15/10