Little Impact Likely On Banks

The steps taken are in line with the general trend and the earlier reiterations of the regulator to maintain soft bias towards interest rates. However, this might not lead to any significant changes from bankers.

While interest rates have been falling on a continuous basis, it has still not resulted in any substantial pick up in industrial credit. The major beneficiaries of these lower rates have been the retail segment and the bond market players. While the RBI has been pressurising banks to pass on the benefits of lower rates to the industry, the latter have been very cautious on this front. Even today, the PLR for banks is 10.5-11 per cent, with the middle and lower rated corporates being charged a premium over this rate.

 

Motilal Oswal, CMD, Motilal Oswal Securities

A feel-good policy

The policy is a continuing reflection of the Reserve Bank of India