Letters To the editor

By: | Published: August 5, 2015 12:31 AM

The nation’s top public sector lender (State Bank of India) appears to have offended the banking regulator (Reserve Bank of India) when its chairperson...

Banks must pass on lower rates

The nation’s top public sector lender (State Bank of India) appears to have offended the banking regulator (Reserve Bank of India) when its chairperson, Arundhati Bhattacharya, stated that SBI will not reduce lending rates in the near future. The statement comes close on the heels of the RBI Governor Raghuram Rajan’s statement during the policy rates review. Rajan chided banks for not having passed the full benefits of the last three reduction in policy rates. Even though public sector lenders have not been passing the full benefits of reduction in RBI’s policy rates in recent times, they have never followed up the Governor’s statement during such policy reviews with an immediate counter-point. In view of this, RBI should not lie low on acting against the so-called transmission delays or bottlenecks. The whole issue deserves a full-scale clarification from banks. It is time the RBI and the public sector lenders come out with a white paper on the topic. Perhaps the corporate sector needs this most when it has targeted financial efficiency as one of its key parameters for improved performance.

KV Rao, Bengaluru

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