As the Reserve Bank of India has kept the key rates unchanged, banks rules out the possibility of cutting lending rates. Bankers said that the RBI's decision to keep rates unchanged was on expected lines given the high current account deficit and troubles on rupee.
State Bank of India Managing Director and Chief Financial Officer, Mr. Diwakar Gupta said there is room for the RBI to look at the long term and not too much on the short term issues like rupee fall and the CAD.
"Therefore, I expect them to do something on the next policy day as inflation is under control," Mr. Diwakar Gupta said, adding that food inflation is a structural issue and not driven by money supply.
Mr. Gupta said expressing his concern over balance of payment, "Our problems on the BoP will remain so long as we remain a services-driven economy and not a manufacturing one."
"The recent depreciation of the rupee and the absence of any uncertainty about its future course warranted holding action by the RBI," HDFC Bank said in a statement.
"Prudence pays, especially for a central bank that's attempting to manage an economy buffeted by adverse external pressures and extreme uncertainty in the global policy environment," HDFC Bank added.
Bank of India's CMD-Mr. V R Iyer said the RBI move to hold the repo rate at 7.25 per cent was expected given the troubles on the rupee and the current account deficit.