Assocham asks RBI to moderate rate hikes; impacts economic recovery

New Delhi: Industry body Assocham on Friday asked the Reserve Bank, which has hiked the key policy rate by 190 basis points since May, to moderate the interest rate hikes so that it does not have an adverse impact on nascent economic recovery.

Reserve Bank of India (RBI) Governor Shaktikanta Das headed a six-member rate-setting panel is scheduled to meet for three days from Monday to take a call on the next set of monetary policy.

The central bank is scheduled to announce the decision of the Monetary Policy Committee (MPC) on December 7 (Wednesday).

"At most the new rate hike should not exceed the 25-35 basis points band," Assocham said in a letter to the RBI Governor, along with highlighting other issues before the industry.

One of the key recommendations advanced by the chamber to the RBI is to treat retail loans for purchase of Electric Vehicles as priority sector lending, with a concessional rate of interest.

On September 30, the RBI had hiked the key policy rate (repo) by 50 basis points with an aim to check inflation which continues to remain its upper tolerance band of 6 per cent since January this year.

It was the third successive hike of 50 basis points (bps). Before the September hike, the central bank had raised the repo rate by 50 bps each in June and August, and 40 bps in May.