Optimism Towards Steady Demand For Gold- Vehicle-Home Loans

Steady pick up in investment activity and strengthening of rural demand conditions bode well for the economy

George Alexander Muthoot, MD, Muthoot Finance

FinTech BizNews Service    

Mumbai, April 5, 2024: The senior BFSI executives express their studies views on the RBI’s MPC meet decisions, announced today by the RBI governor.

George Alexander Muthoot, MD, Muthoot Finance: On expected lines the RBI kept the policy repo rate unchanged while maintaining the stance on ‘withdrawal of accommodation’. While the RBI does remain cautious on the inflation front, we believe moderating inflationary pressures, coupled with the realization of normal monsoon may open up the possibility of rate cuts by the RBI in first half of fiscal 2024-25. We are encouraged by the resilience of the global economy, continued economic growth momentum in India, coupled with relative rupee stability. Steady pick up in investment activity and strengthening of rural demand conditions bode well for the economy and further fuels our optimism towards steady demand for gold loans, vehicle loans and home loans during the year.

We appreciate RBI’s initiative of regularly engaging with multiple stakeholders to simplify regulations and reduce compliance burden. The implementation of recommendations of the Regulations Review Authority (RRA 2.0) is a testament of the RBI’s commitment. At Muthoot Finance, we remain committed to maintaining the highest standards of corporate governance and compliance. We are in alignment with RBI’s view point that regulated entities should prioritise compliance and corporate governance and we believe this is paramount for ensuring sustainable growth for India while also safeguarding customers' interests.

 Vijay Kuppa, CEO, InCred Money: RBI has expectedly kept the repo rates constant at 6.50%. With India GDP growth strong, there is little incentive for the MPC to cut rates, especially when inflationary pressures have not completely eased off. Food price uncertainties are expected to continue and food inflation would need close monitoring. Till inflation is around 4.0% on a durable basis, MPC is unlikely to cut rates. So we can expect rate revisions mostly in Q3FY25. With this background, interest rates being at multi-year highs make it a perfect entry point for investors to allocate funds in Debt. Investors can lock in the high interest rates by investing in long maturity Fixed Deposits, bonds or Long duration Mutual funds.

Sarvjit Singh Samra, MD & CEO, Capital Small Finance Bank: "In a landscape of stability, the decision by RBI to maintain the status quo on the repo rates unchanged underscores the need for strategic foresight and prudent management within the Banking sector. The decision to expand permissible rupee interest derivative products for small finance banks underscores the imperative for agility and proactive risk management. This will help the banking sector to enhance hedging strategies, fortify resilience and navigate market dynamics with confidence."

Ms. Anitha Rangan, Economist, Equirus: “As expected, RBI has maintained its pause on policy rates and keeping intact its withdrawal of accommodation. Alongside the growth and inflation estimates for FY25 have also been maintained at 7.0% and 4.5% respectively. Notably, this is despite stronger than expected advance estimates of GDP of 7.6% for FY24. The voting stance also remains unchanged at 5-1. Notably, RBI has a view that domestic growth momentum led by rural recovery, private capex and government investment will remain strong into the year, and inflation is also expected to remain moderated. However the key headline risk is coming from rising geo-politics which is also getting evidenced in rising crude prices. The impact on inflation from the above two factors warrant a watch and staying cautious on the policy. On liquidity, RBI is likely to continue with the current tools of VRR and VRRR to manage deficit and surplus in the system. Ahead of the bond inclusion, RBI is not doing anything different to change the dynamics of policy actions or liquidity management. In summary, RBI is not lowering the guard while inflation aligns to the target. Status quo for now!”

Mr. Aalesh Avlani, Director & Co-Founder, Credit Wise Capital: "The RBI's policy projects strong investment activity. As a tech driven NBFC, we welcome the central bank's emphasis on simplifying regulations and reducing the compliance burden for entities dealing with public money. The move to facilitate cash deposits at CDMs using UPI and allow third-party UPI apps for PPI wallets will further enhance customer convenience and drive digital adoption. With conducive financial conditions, the RBI's nimble approach, and a bright outlook for agriculture, rural demand, employment and moderating inflation boosting private consumption, we anticipate improved credit flows supporting growth across sectors, including the automotive industry."

Saurav Ghosh, Co-Founder, Jiraaf; “RBI keeping key repo rate unchanged at 6.50% is in line with expectations given the core inflation has reduced and growth rate projections are in line with expectations. This is good for the broader industry at this time as it adds stability and predictability. For retail investors, this is a great time to invest in fixed income products and they can continue to enjoy and lock in high yields now across various products such as government bonds, corporate bonds, and fixed deposit (FD) instruments.”

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