Various policy initiatives taken by the RBI in its first bi-monthly review of 2017-18 with focus on inflation and stressed asset management will restore confidence of investors in the economy, say bankers.
While leaving the repo rate intact, the Reserve Bank said it will take steps to deal with the mounting problem of bad loans in the banking sector and try to keep inflation in check.
SBI Chairman Arundhati Bhattacharya said it (the policy) is on the "expected lines" even though reverse repo rate was hiked to 6 per cent.
"On the developmental and regulatory policies front, the RBI has announced a number of measures... All these will go a long way in improving the financial system," she added.
"RBI's continued focus on inflation targeting will reinforce confidence in the Indian economy and continue to support capital inflows.
ICICI Bank MD and CEO Chanda Kochhar said RBI's continued focus on inflation targeting will reinforce confidence in the Indian economy and continue to support capital inflows.
"The focus on resolution of stressed assets will help in renewing confidence and boosting investment and aggregate demand, going forward," she said, adding that steps with regard to REITs will help expand and deepen domestic financial markets.
The RBI has allowed banks to invest their funds in Real Estate Investment Trust (REITs) and Infrastructure Investment Trusts (InvITs) with a view to reviving the cash-starved infrastructure sector.
Lowering of policy rate corridor by the RBI, said Yes Bank MD and CEO Rana Kapoor, will ease volatility in liquidity and short-term rates and help in preserving financial stability.
"Going forward, I expect favourable macroeconomic outturns amid a neutral policy stance to create flexibility for lowering rates to spur growth impulses," he said.
Dena Bank CMD Ashwani Kumar described the policy as "well balanced" which will bring back investor confidence in the economy.
Overall, the policy tone is neutral and sets the stage for a higher growth trajectory, Bank of India MD and CEO, Melwyn Rego said. The decision not to trigger countercyclical capital buffer for the time being is "a positive" for banks.
According to IDFC Bank Chief Economist Indranil Pan, the policy kept in mind the global perspectives of a steadily firming growth and edging up of inflation in advanced economies.
The RBI continues to show its commitment to driving system liquidity closer to neutrality with all the tools available with itself for the moment, he added.
(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)