‘Accommodative’ stance to help revive durable growth: bankers

‘Puzzling that there are no steps to absorb liquidity’

December 04, 2020 10:32 pm | Updated 10:32 pm IST - Mumbai

MUMBAI, MAHARASHTRA, 25/02/2020: Dinesh Khara, MD (Global Bankings & Subsidiaries), State Bank of India, at a press conference to announce SBI Cards and Payment Services’ IPO, in Mumbai on February 25, 2020. Photo: Paul Noronha

MUMBAI, MAHARASHTRA, 25/02/2020: Dinesh Khara, MD (Global Bankings & Subsidiaries), State Bank of India, at a press conference to announce SBI Cards and Payment Services’ IPO, in Mumbai on February 25, 2020. Photo: Paul Noronha

The decision of the Reserve Bank of India’s Monetary Policy Committee to continue with its accommodative stance this fiscal as well as the next would ensure sustainable economic growth, bankers said.

“The RBI policy of maintaining the status quo was expected but the continued forward guidance of an extended accommodative stance will continue to serve the markets well,” State Bank of India Chairman Dinesh Khara said.

IBA Chairman and Union Bank of India’s MD and CEO Raj Kiran Rai G said that the RBI had clearly indicated continuation of accommodative stance during the current financial year and into the next financial year to revive growth on a durable basis while containing inflation in the prescribed range.

“This gives clarity to the market on the rate front. Evolving macroeconomic dynamics augur well for maintaining the status quo on policy rates,” he said.

Punjab National Bank’s MD and CEO CH.S.S Mallikarjuna Rao said the elevation in consumer prices had been acknowledged by the RBI as a sign of economic activity getting normalised, which could lead to increase in demand.

HDFC Bank’s Chief Economist Abheek Barua said the absence of any major liquidity absorption measures in the midst of a prolonged inflationary episode and the upward revision of both growth and inflation forecasts were somewhat puzzling.

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