Decision to keep repo rate unchanged will improve financial system: Arundhati Bhattacharya

Lauding the Reserve Bank of India (RBI) for keeping the repo rate unchanged at 6.25 percent, State Bank of India (SBI) chairman Arundhati Bhattacharya today said the proposed initiatives will enhance the efficiency of the country's financial system.

"The RBI policy to keep the repo rate on hold was on expected lines, even though the reverse repo rate was hiked to six percent. Elsewhere on the developmental and regulatory policies front, the RBI has announced a number of measures, notably, substitution of collateral under the LAF, allowing the banks to invest in the REITs and financial literacy. All these will go a long way in improving the financial system," said Bhattacharya.

In its monetary policy, the RBI kept its repo rate unchanged at 6.25 percent, but made changes in the reverse repo rate at six percent after all six members of the Monetary Policy Committee (MPC) voted in favour of the decision.

"For 2017-18, inflation is projected to average 4.5 percent in the first half of the year and 5 percent in the second half," said RBI Governor Urjit Patel, who is the head of MPC.

"The Marginal standing facility (MSF) rate and the bank rate are reduced to 6.50 percent from 6.75 percent with no significant impact on bond markets," added Patel.

Patel further stated there is scope for transmission of rates.