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The top brass at the Reserve Bank of India, on Thursday, impressed upon top bankers the need for the recent cut in policy repo rate to translate into lower lending rates.
Bankers, however, emphasised that in the backdrop of the Employees’ Provident Fund Organisation upping the interest on PF deposits from 8.55 per cent (in FY2018) to 8.65 per cent (in FY2019) and small savings rates continuing to remain relatively higher, they may have to up deposit rates. Hence, there is little scope for cutting lending rates.
In the post-monetary policy review press meet on February 7, RBI Governor Shaktikanta Das said: “Whenever there is a policy rate reduction it would be the RBI’s expectation that monetary transmission does take place. But again, we have to keep in mind that the lending and the fixing of the rate of interest is a function of the banks.”
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