Banks not passing benefits of rate cut, says Chakrabarty
Blaming banks for not bringing down interest rates, Chakrabarty said, “Within the interest rate structure, if banks increase their efficiency, interest rates will come down... It (interest rate cut) will not happen if you (banks) don’t reduce your cost."
"If the spread does not come down, people will not get the benefit. Unless within the institution there is reform, you will not be able to derive the benefit of policy reform," he added.
He said: “At one stage, cash reserve ratio (CRR) was 25% and statutory liquidity ratio (SLR) was 40%. Now, SLR has come down to 23%, CRR is 4.5%. People say it should be abolished. But has this benefit of reduction gone to the people?”
He said instead of the lending rates of banks seeing a fall on the lines of cuts in SLR and CRR, the rates have actually witnessed an increase.
The prime lending rate (PLR) of banks was 13.75-15% in September 2008, even as the SLR was 25% and the CRR and repo rate CRR were 9%, he said, adding, “Today, repo rate is 8%, CRR is 4.5%, inflation 9%, SLR 23% and PLR of banks on an average is 1% higher (than what it was in September
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