Directions on credit offtake positive: Shreyas Pandya

The Gujarat Chamber of Commerce and Industry president Shreyas Pandya said the direction by the Reserve bank of India to commercial banks to increase credit offtake to the second-rung corporates is a positive sign.

Reacting to the annual policy statement of the RBI, Pandya said, "Now they will be able easily avail the benefit of falling interest rates. Only a handful of borrowers have gained from the falling interest rates due to the conservative lending policies.

"The real challenge before the RBI is to coax bankers to increase the credit offtake to ordinary borrowers."

"The bank rate was at a three-decade low of six per cent and short-term repo rate was 4.5 per cent.

"The excess liquidity in the system to the tune of Rs 80,000 crore needs to be absorbed in other ways than market stabilisation bonds," Pandya said.

With clear signs in the annual policy regarding the soft stance from the central banker, it is hoped that cheaper loans from banks will continue to feed the retail boom.

He said as far as the banking sector is concerned, there should be improved supervision and governance.

The RBI should focus on policies to make Indian banks credible and globally competitive, he said.

The Reserve bank has not changed any rates including the bank rates and the repo rates.

There is adequate liquidity in the economy and the policy reiterates that the system is flush with liquidity, any CRR cut would have pushed the yield to unnatural levels, he said.

Though the soft interest rate bias continued, inflationary pressure and fiscal deficit remain cause for caution to RBI.

Inflation, which was not allowed to steep due to the general elections, is likely to shoot up in the coming weeks, he said.

Though the central banker has pegged it at five per cent, any unprecedented rise in oil and commodity prices and volatility among major currencies might affect the estimated figure, he said.

"The mid-term review of the policy later this year will reflect the new regime's thinking coming after the new budget," he said.