No cut in repo rates disappoints industry

The Monetary Policy Committee’s (MPC) decision to keep interest rates (repo) unchanged at 6.25% has not gone down well with the industries who were expecting at least a 0.25% cut from the central bank. Moreover, the shift of policy stance by the MPC from accommodative to neutral has also dispelled hopes of any further cut in the near future. Industries, especially the small and medium enterprises (SMEs), were quite hopeful that the RBI might reduce interest rates to ease the pain of demonetisation that has contracted demand by over 10% across all sectors. “The status quo decision by the RBI has absolutely disappointed us,” says Mahesh Gupta, chairman of Kent RO which is classified as a medium enterprise. Even after amassing huge low cost deposits in the demonetisation drive, banks have indeed cut their lending rates, but not to the extent expected by the industry. industry.