Industry hails RBI’s monetary tightening drive

Industry hails RBI’s monetary tightening drive

New Delhi: Indian industry on Thursday said it is “extremely delighted" with the Reserve Bank’s decision to refrain from hiking key policy interest rates and address the problem of a liquidity deficit at its monetary policy review.

“We are extremely delighted that RBI has put a halt on interest rate hike and along side, reduced SLR (Statutory Liquidity Ratio) by one percentage point, which is a very favourable change," Federation of Indian Chambers of Commerce and Industry (Ficci) president Rajan Bharati Mittal said.

He said the RBI move would help ease the liquidity problem and meet the financing needs of the industry.

Mittal said, “Of late, liquidity has been in deficit, which is what has prompted the RBI to take this important measure. RBI’s timely action is indeed welcome."

Industry has been expressing displeasure with the string of policy rate hikes by the RBI in the ongoing fiscal to contain inflation.

In today’s credit policy review, the central bank has left the short-term lending and borrowing rates unchanged at 6.25% and 5.25% respectively.

Furthermore, it has slashed the statutory liquidity ratio (SLR) by 1% to 24% and plans to purchase government securities from the open market to release funds into the system. These RBI measures would result in additional liquidity of Rs48,000 crore being injected into the market.