New Delhi, Dec 7 (KNN) Unchanged Repo Rate has come as a surprise for many Economists, but at the same time they feel that transmission of lending rates from banks is missing due to which RBI has taken the decision to stick to the old rates this time.

RBI has kept the repo rate unchanged at 6.25 per cent in its Fifth Bi-monthly Monetary Policy Statement, 2016-17.

Giving expert views on the Monetary Policy, Manika Premsingh, Economist and Founder, Orbis Economics, told KNN, “Unchanged Repo Rate is a bit of a surprise as the economists had anticipated at least 0.25 cut. And considering the fact that inflation has come up and the similar kind of problem is with growth we would anticipate that RBI shall try to improve that.”

Elaborating further, she explained, “In monetary policy, transmission is a very important thing and I am assuming that it is somewhere in the mind of RBI as well. Lending rate is not reduced as much as RBI’s lending rate to banks is, so transmission is lacking. May be, RBI is waiting for the banks to reduce their rates more.”

She said, “Banks are not able to give as much cash as in the past. Due to which the deposits are piling up in the banks thus they will have an excess of liquidity in the system.”

Dr Yerram Raju, Economist and Risk Management Specialist, said, “It is good that repo rate will remain same for the time being because the banks have deposits. If the banks fail to pass on the rate cut further, then the industry will not be happy.”

For industrial sector, Dr Raju said the banks should lend more because there is demand and bank should meet the demand.

“As today banks are only collecting the deposit, no other work is going on, no loans, no new accounts are opening, so it is important that banks should open separate windows for new accounts and loans,” he added. (KNN/ RAS)