Rate actions show RBI's flexibility, will help markets: SBI chief Dinesh Khara

The surprise rate hike by RBI accompanied with tightening of the cash reserve ratio illustrates the flexibility with which the central bank operates, and the move will support the markets, SBI chairman Dinesh Khara said on Wednesday.

Khara, who heads the country's largest lender which controls over a fifth of the overall assets, termed the decision of the banking regulator as a "front loaded action".

Earlier in the day, RBI Governor Shaktikanta Das delivered a video message in which he spoke about the six-member rate-setting panel having met off-schedule, and announced a 0.40 per cent hike in the repo rate and 0.50 per cent increase in the cash reserve ratio.





"The front loaded action by RBI today to hike benchmark rates and CRR is a testimony of the flexibility, while remaining aware to changing realms of global upheavals will go a long way in supporting the markets," Khara said in a statement.

Analysts have reacted to the RBI move saying more such hikes are in the offing. Equity Markets tanked by over 2 per cent following the announcement of the policy by Das.

Meanwhile, Murali Ramakrishnan, MD and CEO of South Indian Bank, said both these measures were expected and RBI has acted due to the inflationary pressures.

"Both lending and deposit rates are likely to increase. This may be the beginning of interest rate hardening scenario," he added.