RBI's accommodative policy stance reassuring to industry, trade: Chambers

The RBI on Wednesday expectedly left interest rates unchanged

The Reserve Bank of India's decision to continue with the accommodative policy stance is reassuring to the industry and trade, according to chambers.

Industry body Assocham said that this decision would also get immense support from a slew of other critical measures announced by the central bank.

The Reserve Bank of India on Wednesday expectedly left interest rates unchanged and maintained an accommodative stance as the economy faces a renewed threat to growth due to the resurgence of coronavirus cases.

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"While balancing the growth-inflation trade-off to mitigate the impact of the Covid-19 pandemic, the RBI Monetary Policy Committee's decision to continue with the accommodative policy stance 'as long as necessary' is reassuring to the industry and trade," Assocham said in a statement.

It added that the steps enumerated by RBI Governor Shaktikanta Das to ensure domestic financial stability in the wake of volatility in the global financial markets were seen in the rising bond yields.

"Relaxation in the parking of ECB proceeds would provide flexibility to corporates raising resources from the global markets," it said.

Ficci said that the status quo with regard to the repo rate was anticipated given the inflation concern.

"However, the bias indicated by the Central Bank towards maintaining an accommodative stance is reassuring," the chamber said.

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It added that the fresh surge in Covid infections is worrying and the imposition of local lockdowns can undermine the recovery prospects over the near term.

At this juncture, Ficci said, it is critical to ensure that the gains made over the past few months are not undone.

"We are happy to note Reserve Bank of India's commitment towards maintaining conducive liquidity situation over a longer horizon amidst continued uncertainty.

"The extension of schemes like on-tap TLTRO for specific sectors and bank lending to NBFCs for on-lending to agriculture, MSME, housing sectors as priority sector lending; the additional refinancing facility provided for SIDBI, NHB, and NABARD; and the relaxation in the period of parking of External Commercial Borrowing (ECB) proceeds in term deposits are all positive steps," it added.