New Delhi: The Reserve Bank of India (RBI) raised interest rates on Friday for the 12th time in 18 months and said it will persist with its anti-inflationary policy stance, even as growth slows in Asia's third-largest economy.
The RBI lifted its policy lending rate, called the repo rate, by 25 basis points to 8.25 percent, in line with expectations, as it persisted in a fight with inflation that has proven mostly futile.
Following are views of industry officials to the review:
Saumil Daru, Group CFO, Oberoi Realty
"Immediately, I don't expect any impact (for real estate sector), as after the recent hikes also the banks have increased their interest rates materially. We will have to see whether they want to pass on some of these hikes or not, but I don't see immediate impact happening."
Vinod Nowal, Chief Executive Officer, JSW Steel
"When growth is taking place, inflation takes place. When people have the capacity to pay, RBI need to balance it; they should not always use this tool of rate hike. Interest rates are already high, if they are further going to increase them, then it will further affect the business environment."
"This will definitely create a problem for liquidity, somewhere it will slowdown the infrastructure investment as well as manufacturing growth. It is going to further impact already sagging capital expenditure by the industry."
HS Upendranath Kamath, CMD, Vijaya Bank
"Credit growth is something which we may see slowing down. RBI is aware and they have themselves reduced guidance for credit growth. And, on ground level also, we are seeing that credit growth is gradually slowing."
Madhav Acharya, CFO, Crompton Greaves
"I am not sure if 25 bps rate hike is going to help RBI to contain the situation too much. So my understanding is that the interest rate hike will continue for some bit of time. For the slowdown in growth, may be RBI does not have much of a choice there. With more interest hikes to come there will be some more effect on the capex."
Sulajja Firodia Motwani, Joint MD, Kinetic Engg
"The inflation that we are experiencing is more to do with commodities like food... and increasing interest rates is not going to address that issue but instead it is going to slow down the investment, reduce demand for products."
N Seshadri, Executive Director, Bank of India
"Capex is not happening, investment loans are not happening. Next couple of months will give some sort of indication but we believe there will be a pause (in rate hikes). So, after that, people will start thinking about fresh investments and we may see growth back in last two quarters.
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