The Reserve Bank of India (RBI) kept the repo rate unchanged at 4% while maintaining its accommodative stance after the conclusion of the Monetary Policy Committee (MPC) meeting on Friday.
The Nifty Private Bank index advanced 2.03% while the Nifty PSU Bank index gained 7.09% as the benchmark Nifty 50 index rose 0.63% on Friday.
Among the private banks, Kotak Mahindra Bank (up 3.90%), RBL Bank (up 2.29%), IndusInd Bank (up 2.26%), Axis Bank (up 2.16%), HDFC Bank (up 1.70%), IDFC First Bank (up 1.02%), City Union Bank (up 0.34%) and ICICI Bank (up 0.33%) advanced, while Federal Bank (down 0.47%) and Bandhan Bank (down 0.37%) declined.
Among the PSU banks, SBI (up 13.63%), Indian Bank (up 8.76%), Bank of India (up 5.49%), CBI (up 4.86%), Bank of Baroda (up 4.57%), UCO Bank (up 3.73%), Union Bank of India (up 3.33%), Bank of Maharashtra (up 2.49%), Punjab National Bank (up 2.47%), Canara Bank (up 2.28%), Jammu and Kashmir Bank (up 1.62%) and Indian Overseas Bank (up 1.27%) edged higher.
“The MPC decided to continue with an accommodative stance of monetary policy as long as necessary, at least through the current financial year and into next year to revive growth on a durable basis and mitigate the impact of Covid-19” RBI Governor Shaktikanta Das said.
“Inflation has been better than what was expected in December meeting and eased below tolerance level of 6% and the projection for CPI inflation has been revised to 5.2% from January to March 2021” he added.
The RBI had last revised its policy rate on 22 May 2020 to perk up demand by cutting interest rate to a historic low. The latest Economic Survey said that there are expectations of a rebound of the economy with a 11% growth in the next fiscal.
Das said, “Outlook on growth has improved significantly. MPC has judged that need for the hour is to continue supporting growth. Signs of recovery have strengthened further and list of normalising sectors is expanding.”