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Industry associations welcome RBI Governor's Credit Policy Review Print E-mail
Written by Satish   
Thursday, 29 October 2009
New Delhi: Industry associations have welcomed the half yearly review of the Monetary Policy of the Reserve Bank of India.

CII President, Mr Venu Srinivasan said that the RBI Governor has clearly decided to allow the recovery process to strengthen by maintaining the key rates unchanged. Assocham's President, Dr. Swati Piramal said that all growth drivers have been kept intact since the bank did not tinker with its existing repo rate, reverse repo rate and cash reserve ratio.

According to CII, the RBI Governor has also sent out a strong signal to industry and the investor community that the Central Bank is pro growth. With demand still not strong enough and the industrial recovery at a nascent stage this was necessary and CII welcomes the RBI Governor's announcement, Mr Srinivasan said.

The Associated Chambers of Commerce and Industry of India (Assocham) has described the Monetary Policy of the Reserve Bank of India (RBI) on expected lines which will strike a fine balance between growth and inflation.

This is also indicative of the fact that RBI has set it’s mood to review the ongoing interest rate regime in view of inflationary expectations in its next quarterly review policy, pointed out Dr. Piramal. She, however, added that by effecting a modest increase of 1% in statutory liquidity ratio (SLR) to 25%,  the RBI has also expressed its intention for putting a tab on growing inflationary pressures.

CII has noted with some concern that the RBI has cut its FY10 credit growth forecast to 18 per cent compared to the earlier estimate of 20 per cent. RBI has also cut its money supply growth estimate to 17 per cent from 18 per cent. In addition, the central bank has cut its export credit finance to 15 per cent from 50 per cent. CII has said that these are clear indicators of the RBI's assessment of demand in the near term and given this scenario, any tightening of the monetary policy in the near term would be counter productive.

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