Business Standard

Rate transmissions can be seen in next few months: Manas Datta

If the intended process is sincerely followed by the banks we might see a downward interest-rate environment in next few months

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Business Standard New Delhi
The monetary policy of Reserve Bank of India has come a long way from a policy framework to an indicator or pathway to banking / economy with various measures they have taken in last few quarters. Implementation of marginal cost of funds-based lending rate (MCLR) would be guiding the banks to finally get into proactive and transparent market driven pricing that would finally encourage efficiency.

If the intended process is sincerely followed by the banks we might see a downward interest-rate environment in next few months. I think, this was indeed needed long back particularly when Indian banking system did not align their pricing mechanism to the interest rate cuts of about 125 bps by RBI in last one year. 

As a precursor to the monetary policy, this move is a welcome change and may eventually align CP and working capital loans over a period of time. I think, increasing the government borrowings, higher spending as a result of pay commission recommendations, inflation, strengthening Rupee and lowering forex reserves are the various predicaments RBI governor Raghuram Rajan had while making the policy. But even in these overhangs, his actions so far happened to be quite proactive.

Manas Datta
Chief financial officer, Wockhardt Limited

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First Published: Apr 07 2016 | 12:21 AM IST

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