We are disappointed the RBI didn't cut rates: Ashok Leyland CFO

Gopal Mahadevan expects a central bank rate cut in June

Ashok Leyland's Chief Financial Officer (CFO) Gopal Mahadevan said he was disappointed that the RBI didn't cut the repo rate, even though they were not expecting one.

"We are expecting a rate cut in June, given the statements the RBI has made in the past," said Mahadevan.

He added that the RBI pushing the banks to start reducing interest rates is a positive. With the industry on the path of recovery, reduced interest rates will help investment, Mahadevan said.

"We would like to have a rate cut to happen sometime in June, and the RBI governor has given a hint that the rates could come down by 50 basis points. But I am not sure when he is going to do it".

The governor is targeting real interest rate at about 1.5-2% and if you were to take an inflation target of about 6%, there will not be room for much rate reduction, Mahadevan said.

 

Any reduction in the interest rate would be welcome for the commercial vehicle industry. 

As far as the banking system is concerned, the RBI has asked them (bankers) to look at marginal cost of funds, instead of just looking at plain base rates, he said.

On cross holding of banks in infrastructure bonds, he said,"I think what they are trying to do is to deepen the debt market. There has been a clear necessity in the past also for actually deepening the debt market in India. To have a wider distribution of government bonds is also going to help."