Loan growth assumptions are quite benign, says Kotak Equities’ MB Mahesh

RBI has held on to its dovish stance and indicated that it expects inflation to taper down. That has implications for the banking industry in terms of margins and returns on their bond portfolios.

Speaking to CNBC-TV18, MB Mahesh, analyst at Kotak Institutional Equities said, “When we look at some of the policy actions on the banking sector, usually it is around the pace at which the interest rates are changing, and the impact that it has consequently, on growth and to some extent on the treasury gains. At this point of time, it is just the start of the interest rate cycle on the upside so at this point of time, we are not kind of worried about it.”

He added, “Growth is still quite weak and I think that has been pointed out in the policy yesterday as well. Our loan growth assumptions right now are still quite benign. We are still well below the pace at which that we normally seen in an economy like India. So I think that has what is probably led to some of the decisions that went into yesterday.