India Incorporation Expect Credit Policy To Be A Non-Event
Last week, the Reserve Bank of India governor Bimal Jalan made it clear that the credit policy would not indicate any changes in the benchmark bank rate and cash reserve ratio (CRR) which were raised in July. Business Standard spoke to few senior bankers, marketmen and corporate chiefs on their expectations from the policy. Some changes in export financing norms, valuation of investment regulations and tightening of provisioning rules are top among the wish-list. Extracts:
Bank of Baroda chairman-cum-managing director P S Shenoy: It is likely to be a routine affair with no monetary measures on cards. However, we may see something on the export financing front and there could be some incentives for exporters. I am also expecting certain tightening on prudential regulations. The RBI may go strict on banks' bad debt provisioning.
Bank of India chairman-cum-managing director K V Krishnamurthy: Bimal Jalan himself said there would not be any change in CRR and bank rate. I feel the central bank may tighten the accounting norms for bad debt provisioning. At present, we provide for around 30-35 per cent of bad debt. This is may go up further. The RBI may also tell banks to concentrate on core activities and caution against diversifying. There could be some relief for non-banking finance companies.
IndusInd Bank chief executive officer and managing director K R Maheshwari: The RBI governor has mentioned that there will not be any major changes in the policy -- no CRR and bank rate cut. We anticipate fresh measures in respect of the credit delivery system, especially in areas of bill discounting and bankers' acceptances. Some of the suggestions made by the working group headed by K R Ramamoorthy, which had submitted its report recently, may be operationalised. We have a strong feeling that the export credit refinance, which has been reduced to 50 per cent, will be restored. The implications of the reduction in refinance are severe, particularly when there is a sluggish growth in exports.
Kotak Mahindra Asset Management Company chief executive officer Sekhar Sathe: No major policy change is likely to be addressed in the credit policy. The RBI has already made it clear that there will be no reversal in interest rates. I do not expect any change in the operational front as well. The document will be a mere review of the economy and the central bank's outlook on the economy.
HDFC Bank head (credit and market risk) Paresh Sukthankar: Going by recent reports, there may not be any major announcement from the central bank. However, there could be some announcements on the valuation of investment norms. Nothing much is expected from the policy.
Tata AMC fund manager S Sankarnaryan: No change is expected in the credit policy. Inflows from proposed NRI deposit funds will be the crucial factor in determining the rupee rate and possible policy changes in the future.
ILFC asset management company managing director Vibhav Kapoor: No major change is expected in CRR, SLR or bank rate. The monetary policy will remain unchanged.
DGP Windsor, chairman, Dilip Piramal: The industry expects abundance of credit.
Grasim Industries group executive president, fabric and apparel business, Vikram Rao: The policy should be favourable to the economic growth taking into account the global economic scenario.
UDV India Ltd's managing director Deepak Roy: Interest rates should go down and should not keep changing every three months.
Kopran finance director Lalit Ratadia: As the rupee is falling, the RBI should go for policies with a long-term vision. Sudden fluctuation in the rupee is affecting the economic growth in general and pharma industry in particular -- because the pharma industry is largely dependent on exports.
UTI Bank treasurer Partha Mukherjee: The credit policy is likely to come up with clear guidelines on investment valuation norms. Besides, the central bank is likely to clear its stand on the exchange earners' foreign currency scheme. We do not expect any major policy change on the interest rate front.
e Mecklai director N Subramaniam : There will not be any major announcements. The policy is not being used as an instrument to declare any policy changes. It will be a non-event.
First Global managing director Shankar Sharma: The monetary policy has no relevance in the current scenario, especially when the fiscal policy is not in place.
Moneypore.com managing director Dardsen Mehta: It will be a lacklustre policy as it is already known that there will not be any CRR or bank rate cut. The credit policy has ceased to be a fiscal instrument to influence the economic growth.