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RBI Credit Policy: The Monetary Policy Committee (MPC) of the Reserve Bank of India (RBI) is meeting next week to decide on the policy rates. In such a situation, the industry lobby body Assocham has urged the RBI to at least increase the rate. Assocham has also requested RBI to consider retail loans for purchase of electric vehicles (EVs) as priority sector lending loans.
According to Assocham, the interest rate hike should be moderate so that the rising cost of borrowing does not adversely affect the economic recovery in the country after the pandemic. At the most, the new rate hike should not exceed 25-35 basis points (bps) band, Assocham said in a letter to RBI Governor Shaktikanta Das, while also discussing other issues faced by the industry.
These are the recommendations of AssochamOne of the key recommendations given by Assocham is that retail loans for purchase of EVs should be treated as priority sector lending loans with concessional interest rates. Assocham Secretary General Deepak Sood said, retail advances against EVs can be included under priority sector lending. This can help in taking forward the EV story of India.
Indian economy needs support to improve – AssochamRegarding the rising cost of borrowings, the Chamber said that the improvement in the Indian economy is quite noticeable. Especially in the background of global challenges, this is a ray of light. However, it is still in its early stages and needs to be supported. When it comes to the domestic economy, there are signs of inflation peaking. Even in developed markets, there are early signs of inflation peaking, thus setting the stage for the RBI-MPC to move towards halting the rate hike cycle.
The Chamber has other suggestions as well- learnIn another suggestion, the chamber said that to ensure availability of low-cost funds for renewable projects, the RBI may consider a special arrangement for IRDAI to borrow at the repo rate. In a unique proposal, Assocham urged the central bank to consider a time-bound approach to bring all banks under the Account Aggregator (AA) framework. This framework helps an individual to access and share information from one financial institution to another securely and digitally across the AA network. Other financial institutions regulated by SEBI/IRDAI may be encouraged to join the framework as information providers and information users.
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