Disappointed by RBI's decision to keep interest rates unchanged, India Inc today said there is a need to cut the rates by 75 basis points in remaining months of 2015 and hoped for monetary easing after Union Budget.
The RBI on Tuesday maintained status quo on interest rates, saying there have been no developments to warrant further easing since an unscheduled rate cut about a fortnight ago.
The central bank today kept the benchmark repurchase rate at 7.75 per cent, but cut the statutory liquidity ratio (SLR) -- the amount of funds that lenders must set aside -- by 50 basis points to 21.5 per cent of deposits from February 7, a move that will help banks to increase lending.
"A repo rate cut today would have perked up sentiments... we are hopeful that the repo rate cut cycle would be resumed after the presentation of the Union Budget for 2015-16.
"We see the need for a cut of at least another 75 basis points during 2015 and its effective transmission by the banks to industry in the form of lower lending rates to boost growth on a sustainable basis," FICCI said in a statement.
It said the cut in SLR gives a clear indication to the banking sector to make liquidity and funds available for productive purposes such as investments to spur growth. PHDCCI too expressed hope that going ahead, the RBI would cut rates by at least 50 basis points.
"There is a need to rejuvenate the demand scenario in the economy to boost manufacturing growth and to create more and more employment opportunities. "So at this juncture, lower interest rates and lower cost of borrowings for the industry would be inevitable," PHDCCI said.
Assocham said the central bank should nudge the banks to do effective transmission of the rate cuts which have already taken place.
"The cost of capital must come down for the entrepreneurs and the interest rate must also be down for the consumer to revive the demand," it said.
