Comment: M V Nair, CMD, Union Bank of India

Tightening in a pause mode

The second quarter review of RBI indicates policy rates are closer to normal and consistent with growth and inflation. The calibrated steps RBI has been taking since the beginning of this year have reined in core inflation while helping the economy operate near trend.

We may see more of sector-specific counter-cyclical measures going forward, like those announced for the housing sector. The policy shows continuity of market reforms, and has taken steps for deepening financial inclusion, promoting credit delivery, especially to small & medium enterprises, strengthening payments and settlement systems and preparing the banks for enhanced corporate governance, capital standards and capacity building. India is now on the cusp of sustainable high growth. The demographic profile of the country is witnessing a major change. The economic aspect of the changes happening across the country is robust domestic demand – for consumer durables, housing, shopping and so on. For banks also, this means robust credit demand.