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Pass off low interest rates to borrowers, RBI tells commercial banks

Mon, Apr 04, 2016, 05:15 PM
To rein in commercial banks which are not lowering the interest rates for the customers, the Reserve Bank of India is embarking on a new plan and new rules to suit a monthly interest rate change.

The move carries risks such as periodical and severe cash crunches, but then the lowering interest rates in the interests of the borrowers could not be overlooked.

Under the new RBI rules, the banks are expected to adjust their lending rates every month based on what they offered to new bank deposits.

The RBI adopted the new rules effective from April 1. Although the RBI cut the repo rate by 125 basis points last year, the commercial banks did not pass off the entire benefit to customers, by reducing the repo rate by only 60 basis points.

The RBI proposes to cut the repo rate by 25 BP tomorrow as India bid to revive investment and spur economic growth is underway.
Agency: Ap7am Desk
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