He expressed hope of a one per cent hike in the repo rate in the current financial year.
RBI has increased the policy rate (repo) by 0.40 percent to 4.40 percent to control inflation. Along with this, it has also been decided to increase the cash reserve ratio (CRR) by 0.50 percent to 4.5 percent. This will reduce the cash with banks by Rs 87,000 crore.
Kotak, Managing Director and Chief Executive Officer (CEO) of Kotak Mahindra Bank, told reporters, “It was very clear that inflation was rising very rapidly. And so, clearly there was a need to step in. I saw this (increased repo rate) as a strong message from RBI that they are taking inflation and inflation projections very seriously.
He said that the risk of inflation rising so high cannot be taken where it becomes difficult to control it.
Kotak said MCLR-based loans will also become costlier sequentially, with the impact of the hike in repo rates on deposit rates.
Regarding the Life Insurance Corporation of India (LIC) IPO, he said that the response from retail investors on the first day of the issue is overwhelming.