New Delhi: The 75 basis point rate cut by the US Fed Reserve has left the Indian bankers demanding for a similar step by the Reserve Bank of India (RBI). Many authorities have hinted at a rate cut by the RBI, and RBI’s declaration is being eagerly awaited by the entire banking and financial industry. The third quarter review of the annual policy is expected on Tuesday. Though the inflation is constantly prevailing below the 5% mark, high prices of oil have been a major concern for RBI. Another major concern for the RBI and government is that an immediate declaration of rate cut could cause the stock market to gather steam and turn into a full-fledged rally again. However, experts believe that a 25 basis point reduction in the repo rate could be a well placed measure before RBI’s nod to market demands. The slowdown in textile loans, real estate loans etc has also been a concern for banking experts and they firmly believe that without appropriate signals from RBI, it will be diffcult for the banks to meet targets. The Indian Banks’ Association (IBA) head H N Sinor said, “the central bank may signal a 25 basis point cut in rates.” A rate cut in January is also expected because it is very likely that the US Fed might slash the rates further to prevent a slowdown in the US economy. The US economy is going through a lean phase and appropriate signals will have to be provided by the Fed to stage a recovery. If that happens, there would be a wide gap between the Indian and international rates. |