Mumbai, Feb 7 (PTI) The bankers welcomed the Reserve Bank's decision to cut the benchmark lending rate by 25 basis points saying it will spur growth and complement the announcements made in the budget.

They also hailed RBI's announcement to defer the implementation of the revised liquidity coverage ratio by one year.

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"Since the budget has proposed measures to propel domestic consumption and higher government capex, this rate reduction from RBI would further support growth," industry lobby grouping IBA's chairman M V Rao said in a statement.

The 25 basis points cut in repo rate was along expected lines, he added.

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The "Governor has indicated that the proposed Liquidity Coverage Ratio (LCR) as well as project financing norms will get deferred by a year, and are not to be implemented before March 31, 2026. This additional time will help banks to adhere to the implementation aspects. It is a welcome move," Rao said.

Country's largest lender SBI's chairman C S Setty said the decision to start the easing cycle with the 25 basis points cut is timely, contextual and also well communicated.

He also seemed to welcome the changes on the regulatory front, saying the focus on making the transition seamless and non-disruptive is welcome.

"The regulatory announcement on forward contract, reviewing trade settling cycle and addressing cyber security in banks and payment systems will ensure better price discovery, more broad basing of participants and ensuring trust in digital banking," Setty added.

"Though additional liquidity measures are not proposed in the policy, the Governor has urged the banks to play actively in the uncollateralised call money market to make it deeper and vibrant for better signal extraction from the weighted average call money rate," IBA's Rao said.

AU Small Finance Bank's executive director and deputy chief executive Uttam Tibrewal said the RBI Governor's maiden speech indicated his preference to revive growth under the flexible inflation targeting framework and will pave the way for potential further easing of interest rates.

Foreign lender Standard Chartered Bank's chief executive officer for India and South Asia Zarin Daruwala said the 25 basis points repo rate reduction after a hiatus of five years is a positive move and could signal the start of a rate cutting cycle.

"Given the uncertain global environment, this cut along with the recent tax relief to individuals, should help a rebound in economic activity. The MPC's confidence around moderating inflation augurs well for sustained economic growth," she said.

Among the non-banks, Rajiv Sabharwal of Tata Capital, said the policy rate cut is a well-calibrated step that reflects confidence in India's economic resilience while maintaining financial stability.

"This move will ease borrowing costs, supporting credit expansion, particularly in rural and semi-urban segments, where demand continues to strengthen," he added.

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