New Delhi, Oct 1 (NationPress) The Chairman of the State Bank of India (SBI) and the Indian Banks Association (IBA), C.S. Setty, expressed on Wednesday that the RBI's policy statement represents an authoritative step toward the introduction of market reforms while moving past mere rate adjustments.

This initiative to implement a risk-based deposit insurance premium is poised to significantly enhance the financial performance of stable banks.

Setty noted, "The elimination of frameworks concerning specific borrowers and the approval of M&A financing by Indian banks will stimulate growth and encourage a greater flow of credit from banks."

Additionally, the extension of timeframes for the repatriation of funds from foreign currency accounts held by Indian exporters in the International Financial Services Centre (IFSC), along with the forex allocation for Merchanting Trade Transactions and the simplification of reconciliation processes in the EDPMS/IDPMS portals, are commendable initiatives that will further facilitate the ease of doing business within the export sector.

According to him, "The initiatives aimed at improving customer satisfaction and protection, along with enhanced utilization of the rupee in cross-border transactions, will fortify the broader financial ecosystem, improving currency acceptance and outlook in the medium term."

The SBI's Economic Research Department indicated that the unanimous decision by the Monetary Policy Committee (MPC) to maintain the current policy rate indicates a rare dynamism that extends beyond monetary policy, supported by favorable liquidity conditions and a stable external environment despite uncertainties in trade.

The domestic financial sector is expected to gain the most from a series of proactive reforms aimed at global repositioning, the report observed.

It further stated, "We anticipate that inflation figures for FY26 and FY27 will be considerably lower. Given the instability afflicting global financial markets and economies, the MPC's choice to hold rates appears rational from a regulatory perspective."

Nevertheless, since effective monetary policy communication is crucial for shaping expectations, the perceived response function and the clarity of communication are of utmost importance.

In this light, the RBI has left the possibility of future rate reductions open, considering the relatively low inflation projections and downward adjustments in growth, although the timing of such moves remains uncertain, as indicated by the SBI report.