Reduction in small savings rate would give clear signal for a benign interest rate regime, RBI deputy governor, KC Chakrabarty said after taking charge charge on Monday.
?When we are saying interest rates are coming down, that means the small savings rate should also go down,? said Chakrabarty in his first interaction with the media after taking over charge as deputy governor of the central bank. Chakrabarty also said it was time to push for financial inclusion. Consolidation in the banking sector can wait as the present situations were not conducive and there should be 3-5 year road map for it, he added. ?Financial sector reforms have gone far ahead of real sector reforms. There is not much scope for reforms (in financial sector) immediately… There is a greater need to push the financial inclusion? Chakrabarty told reporters.?Nearly 51% of Indian population is yet to be brought into the banking fold,? he said.
The average small savings rate is 8%, and the small savings schemes include postal savings and national savings certificate. Banks have been citing 8% rate as the floor for deposit rates given the competition they face from small savings schemes.
Also, as they can?t reduce deposit rates sharply below 8%, they can?t cut their lending rates significantly.