Analysts see upto 50 bps rate cut by December 2017

Analysts feel that the Reserve Bank may cut the policy rates by up to 50 basis points through the course of this year.
The RBI in the sixth bi-monthly monetary policy today decided to keep the repo rate unchanged at 6.25 per cent. The policy rate stands at its lowest level since 2011.
"We expect RBI to go for a 50 bps rate cut in calendar year 2017," Care said in a statement.
The RBI's move from accommodative to neutral policy stance indicates that in case of a spike in inflation, it may opt for a rate hike, Care said.

"Although, the probability of the repo rate being reduced to 6.0 pc has become decidedly weaker, as corroborated by the spike in 10 year G sec yields, a final rate cut of 25 bps should not be ruled out at this stage," Icra managing director and group chief executive Naresh Takkar said.
While change in the stance to neutral and focus on bringing CPI inflation to 4 pc in a durable manner lent a rather hawkish tinge to the policy document, the verbal comments emphasised flexibility, he added.

Crisil expects that the gross non-performing assets (GNPAs) will remain at elevated levels in the next fiscal as well due to the demonetisation.

"We expect GNPAs to remain at elevated levels in the next fiscal as well due to business disruption on account of demonetisation, overall weakness in demand, continued slowdown in investment-linked sectors, strained corporate cash flows, slippages from restructured assets, and lower sales of bad loans to asset reconstruction companies," Crisil said.
Notwithstanding the reduction in lending rates by banks at the beginning of 2017, asset quality is expected to remain under pressure over the next year as well. GNPAs for the banking system are expected to increase to 9.8 per cent as of March from 7.6 per cent as of March 2016, it said.