RBI's ECR hike no kicker, cost of fund real issue: Bankers

However, Romesh Sobti, MD & CEO, IndusInd Bank feels that this is not going to any big kicker on liquidity because as it is there is plenty of money available from the RBI under the repo window.

"Unless you run out of the repo window so you have got another window, availability of funds is not the issue, I think it is the cost of funds which is really the issue. So I don’t think this is such a big relief item," he says in an interview to CNBC-TV18.

Sobti also stresses that a pause in rate cut doesn’t mean an escalation in non-performing loans (NPLs). He argues that there are other factors like a slowdown that would have created NPLs.

Agrees S Raman, CMD, Canara Bank that reduction in the rates of interest would have helped. "But then to characterise the present situation as going to be of some lethal consequence to the industry I do not agree with that," Raman adds.

Meanwhile, Sobti also elaborates that credit growth has followed a slightly contrarion sort of a trend and a lot of that is entrained by the fact that there has been a lot of onshoring of debt from offshore debt.

"So that would have also sort of given a boost to credit growth because even last quarter we didn’t see credit growth falling off. In our own book for instance we are not seeing a credit growth letting off but we may not be sort of symptomatic of the whole industry because we have a smaller balance sheet but I will not be surprised that if credit growth doesn’t come up to the extent the market is expecting," he explains.