Read comments on RBI policy from Dinesh Khara, Chairman, SBI; Saikrishnan Srinivasan, MD, Experian Credit Information Company of India; Girish Kousgi, MD&CEO PNB Housing Finance; Achala Jethmalani, Economist at RBL Bank; Anurag Mittal, Head of Fixed Income, UTI AMC; ASSOCHAM Secretary General Deepak Sood; Bhuvan Rustagi, COO and Co-Founder, Per Annum & Lendbox; Kanav Kalia, Chief Sales and Marketing Officer, Oxane Partners; and Vijay Kuppa, CEO, InCred Money:
Kanav Kalia, Chief Sales and Marketing Officer, Oxane Partners
FinTech BizNews Service
Mumbai, December 9, 2023: Reserve Bank of India announced its monetary policy on Friday. Here is what some of the leading BFSI stakeholders as well as experts have to say about measures taken by the regulator.
Dinesh Khara, Chairman, SBI, points out: The RBI policy announcement is a clear affirmation that the Indian economy is poised for a stable inflation and high growth regime with the possibility of growth breaching 7% for the 3rd successive year. The measures regarding liquidity will facilitate better fund management by banks. The enhancement of limits under UPI for education and healthcare will ensure that UPI truly emerges as a public good. Furthermore, moving towards a unified regulatory framework for connected lending and a regulatory framework for web-aggregation of loan products will ensure better pricing, transparency, and enhanced customer centricity.”
Regulatory Framework For Digital Lending Will Enhance Customer-Centricity And Increase Transparency
RBI announced the measures during the MPC announcement for fintech lending and increase in UPI limit. Saikrishnan Srinivasan, MD, Experian Credit Information Company of India, explains: “The 32nd Monetary Policy has brought forth a list of optimistic announcements that will help streamline lending and mitigate credit risk. The decision to introduce a unified regulatory framework is a welcome move, as it will enable structured operations in credit pricing and management. The regulatory framework for digital lending, specifically web aggregation for loan products, will enhance customer-centricity and increase transparency. This step will enable better coordination of operations across financial institutions, and their partners to strengthen the credit ecosystem. India is evolving rapidly with unmatched technology led financial capabilities that has created a world class payment ecosystem. Increasing the UPI limit from Rs1 lakh to Rs5 lakhs for payments to educational institutions and healthcare, and the increase in e-mandate limit for recurring online transactions via UPI to Rs1 lakh, will enable consumers to pay more seamlessly. Overall, the policy is on the anticipated lines, and announcements on UPI and the regulatory framework are welcome moves.”
Supporting Housing Consumption Via Urban, Rural Demand Augurs Well
Girish Kousgi, MD&CEO PNB Housing Finance, says: “We welcome RBI’s decision to retain the repo rate at 6.5%, indicating a balanced approach to economic growth and inflation. While the long-awaited normalcy still eludes the global economy, India anticipates an optimistic growth trajectory. The GDP growth projection for FY24 to 7% from the earlier 6.5% will help maintain the ongoing economic momentum. The emphasis on supporting housing consumption via urban and rural demand augurs well, providing a boost to the real estate segment. The focus on data security through the proposed cloud facility for financial institutions is also laudable, and will help strengthen consumer trust and confidence. Further, the regulatory framework for web aggregation will create a more level playing field for all entities vis-à-vis loan processes, thereby ensuring an unwavering focus on customer centricity. At PNB Housing Finance, we are optimistic about the growth opportunities in the overall real estate sector, given our heightened focus on retail affordable housing, and will continue to leverage these to cement our leadership in the industry.”
This is a good policy as it favours business continuity
Ms. Achala Jethmalani, Economist at RBL Bank, states: “The policy outcome remains favourable. A status-quo in policy comes on the back of improved economic growth prospects without posing significant upside risks to the inflation trajectory. The status-quo on liquidity approach and no fresh regulations on lending activity is reflective of the Reserve Banks’ positive outlook on both price stability and financial sector stability. This is a good policy as it favours business continuity. We see the Repo rate at 6.50% with nimble approach on liquidity management continuing till March 2024.”
Environment For Fixed Income Is Constructive With Opportunity To Participate In Capital Gains
Anurag Mittal, Head of Fixed Income, UTI AMC, observes: “The RBI policy is very pragmatic & positive. RBI took comfort from lower core inflation & benign global conditions. We expect rate cuts probably to start in H2CY24 preceded by a change in forward guidance & stance on liquidity once RBI has greater comfort on dissipation of one-off food price shocks. With global & domestic policy rates peaking & inflation momentum slowing down, the environment for fixed income is constructive with opportunity to participate in capital gains as the rate cycle turns.”
Disinflationary RBI policy well aligned with growth objective: ASSOCHAM
Secretary General Mr Deepak Sood, points out: “RBI's continuing focus on 'disinflationary' monetary policy retaining key REPO rate unchanged at 6.50 per cent is well aligned with the intention of the Monetary Policy Committee for an ecosystem, favourable to a sustainable growth which promises to be robust braving global headwinds. While inflation has been declining for the past few months, RBI seems resolute in its target of taming it to its target of four per cent. It has so far kept a vigil eye on both global and domestic events for a stance that would bring more confidence to investors, borrowers and consumers as the focus of the credit policy remains on price and financial stability. RBI has reinforced a robust and resilient trajectory of economic growth, revising its outlook for fiscal 2023-24 upward to 7 per cent from its earlier projections of 6.5 per cent. ''This puts a stamp of RBI reinforcement of India remaining the fastest growing economy of the world amongst the major economies.”
Fast Growing Data Management Requirements Of Economy Are Addressed:
The ASSOCHAM further welcomes RBI moves: “Enhancing the UPI transaction limit from Rs 1 lakh to Rs 5 lakh for hospitals and educational institutions is a pragmatic measure. " Based on the feedback, this limit can be revised for other sectors as UPI has emerged as a great enabler for micro, small and medium enterprises. RBI's move to set up a cloud facility for the Indian financial sector reflects fast growing data management requirements of the economy. Likewise, a fintech repository would expand the convergence between the fintech’s and the financial institutions, including banks and NBFCs. Regulatory framework for the web aggregators for loan products would bring in safety to borrowers and credibility to the ecosystem.”
Balancing The Need To Control Inflation While Fostering Economic Growth
Bhuvan Rustagi, COO and Co-Founder, Per Annum & Lendbox, believes: "Overall, we would consider this a “Hawkish Pause” by the central bank, most experts would agree with RBI’s decision to keep the rates unchanged given encouraging trends in inflation and steady economic growth, this pause is likely to continue until there are clearer signals about the inflation trajectory. The decision by the MPC signals a cautious approach balancing the need to control inflation while fostering economic growth, the possibility of future rate cuts depends on the evolution of key macroeconomic indicators, particularly inflation since RBI’s focus may be to bring inflation closer to its target of 4% before any further action".
Amplifying World-Class Tech Ecosystem In Flourishing Private Credit Market
Kanav Kalia, Chief Sales and Marketing Officer, Oxane Partners, feels: "With India surpassing the $4 trillion in GDP marks a significant milestone in its remarkable economic expansion. In steering global economic challenges, the Reserve Bank of India's steadfast maintenance of a 6.5% repo rate reflects a strategic balance between inflation control and fostering fintech growth. The significant decline in core inflation attests to the effectiveness of the monetary policy. Additionally, the establishment of a Fintech repository by the RBI underscores its commitment to innovation and financial technology, paving the way for a more resilient and technologically advanced financial landscape. Simultaneously, the flourishing private credit market in Asia signals increasing confidence in the region's economic prospects. With a forward-looking vision, we are committed to amplifying a world-class technology ecosystem in the private credit market that is further fuelling economic growth.”
A Case For Increasing Allocation To Debt In The Portfolio
Vijay Kuppa, CEO, InCred Money, feels: “The high interest rates prevailing now make a case for increasing allocation to debt in the portfolio to mitigate any material correction in the Equity portfolio. Investors should remain agile in their investments considering regulators have become vary of excesses forming in the financial space – both lending and investing.
While growth is not expected to be a cause of concern, inflation is. Despite cooling off in the last couple of months and within acceptable limits, it is still higher than the MPC mandated target of 4%. The RBI is extremely clear and rightly so has a disinflationary stand. As per RBI projections, the headline CPI will come down to 4% only in Q2FY24. Inflation will need to be around 4% on a durable basis for RBI to consider cutting rates. Considering this, any rate cut before Q3FY24 seems unlikely. It’s time to be ‘cautiously optimistic’! India is a bright spot among the faltering global economic backdrop. Growth numbers have been strong led by Festive sales and rural demand showing some turnaround.”
