Reserve Bank of India (RBI), the country's central banking institution, has declared that it has cut the short term lending rate (also called repo) by 0.25 per cent to 7.75 per cent, with effect from January 29, 2013. Further, RBI has also toned down the Cash Reserve Ratio (CRR) by a similar margin at 4 per cent, thereby releasing liquidity worth some Rs. 18,000 crore into the system.
S. Shandilya, President of Society of Indian Automobiles Manufacturers (SIAM) has acknowledged the latest move undertaken by RBI in right, as a great development and can be looked on as positive signs of growth in the market. However, Shandilya also underlined the fact that industry welcomes the decision and increased liquidity will ensure boost to the purchasing sentiments of domestic consumers.
Maruti Suzuki India Limited, the country's largest passenger car manufacturer, has also welcomed RBI's latest 0.25 per cent repo cut and termed the decision as a move in right direction. Expressing his company's stance on the latest RBI directive, Mayank Pareek, Chief Operating Officer (COO), Maruti Suzuki India, was quoted as saying, “...but it is too less for now. This step alone may not bring in any big impact, at least in the automobile market.” The decision is anticipated to lead the charge in normalising present auto, home and corporate loans scenario, as well as refurbishing the investments into the market.
Further, Mahindra and Mahindra Limited, the country's favourite utility vehicle maker and fourth largest car maker, has appreciated RBI's latest monetary policy. Commenting on the repo cut, Pawan Goenka, President, Automotive division and Farm Equipment Sector (FES), Mahindra and Mahindra, said, “Today's combo of a repo as well as CRR cut is a welcome announcement and hopefully, will help revive investments in the core sectors, which the economy needs. Coupled with the recent policy announcement by the government, I see this as a good beginning.” He also affirmed that the company was concerned with slack economic growth and slowdown in manufacturing process witnessed during the past few months.
General Motors India Private Limited, the country's fifth largest passenger car maker, believes that the government should have ensured a cut in repo rate by at least 50 basis points, in order to counter the borrowing costs. Speaking his mind about the company's stance on the latest repo rate cut, P. Balendran, Vice President, General Motors India, was quoted as saying, “I don't think a reduction of 25 basis points will immediately support the revival of demand. Since the overall economy continues to remain under pressure, the small cut is not likely to make any difference as far as demand scenario is concerned. I hope more rate cuts will happen progressively in the coming months.”
