Rate cut likely to spur credit offtake

Published: January 20, 2015 1:06 AM

The Reserve Bank of India’s (rbi) move to cut the repo rate by 25 basis points (bps) last week has set in motion a much-awaited turn...

The Reserve Bank of India’s (rbi) move to cut the repo rate by 25 basis points (bps) last week has set in motion a much-awaited turn in the monetary policy cycle. As many retail loan demand drivers are sensitive to rates, the lowering of interest rates is likely to spur credit offtake. Till 2002, retail loans were below 10% of total loan assets of Indian banks. The boom years of 2004-07 saw a rapid build-up of retail loan portfolios of banks, and they accounted for 35% of banks’ incremental loan assets. However, between 2008 and 2012, the share of retail assets fell to a low of 17.4%.RBI rate cut, RBI repo rate, RBI monetary policy, RBI BJP, Reserve Bank of India, RBI

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