RBI Monetary Policy: Views by Mr. George Alexander Muthoot, MD, Muthoot Finance

Mr. George Alexander Muthoot, Managing Director, Muthoot Finance -

 

Mr. George Alexander Muthoot, MD, Muthoot Finance

The RBI hiked the repo rate by 25bps today and maintained its stance of ‘withdrawal of accommodation’, this was largely on expected lines and also in line with consensus expectations. The macro-economic challenges still continue and core inflation remains sticky. However, the resilience of the Indian economy, firming up of urban consumption demand, and improving rural demand reinforces our optimism on the growth front and we expect steady demand for gold loans. Further, given the various measures announced in the Union Budget recently, including the rise in capex by 33 percent, demand is further expected to increase. RBI measures to expand the scope of TReDS will improve the cash flows to MSMEs, this coupled with the recent announcement in the budget towards the MSMEs will surely give support to the MSME sector which was most impacted during the pandemic. We do believe that a large part of the RBI rate hike cycle is behind us unless inflation flares up unexpectedly. Our borrowing cost may rise slightly going ahead but we are confident of maintaining our margins at the current levels.

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