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A day after the RBI cut the policy rate, Minister of State for Finance Jayant Sinha put public sector banks on notice, saying they will have to face the music if there is evidence of cartelisation to avoid passing on the interest rate benefit to customers.
“If they are doing anti-competitive things, not to the benefit of the consumers, we will take steps,” he said at a press conference at the BJP headquarters here on Thursday to explain the fine-print of the General Budget.
The Centre considers the latestcut in the repo rate (at which banks borrow from the Reserve Bank of India) a result of fiscal consolidation measures in the Budget.
It comes after the January 15 cut, when RBI trimmed the rate by 25 basis points.
However, then, barring United Bank and Union Bank, none of the public sector banks lowered their ‘base rate.’ This meant no relief for those who had taken home, car and other consumer loans. The Centre wants to ensure that at least now benefits reach the consumer. Banks have indicated rate cuts by April. If the interest rate on home, car and education loans comes down by half a percentage point, one can save up to ₹10,000 on a total loan of ₹20 lakh, Sinha said.
Once there is more fiscal space, more tax benefits can be given to the middle class, he added.
Not ‘pro-corporate’
Shrugging off the Opposition’s charge that the Budget was “pro-corporate”, Sinha said it was a “reformist” and a “landmark” one, with something for all.
He said that despite lowering the corporate tax in phases, the rate after four years will be higher than the present effective rate, terming the Budget as ‘Sabka Budget’ (Budget for all).
“The Budget has many structural reform measures, particularly the Jan Suraksha programme, which is the start of a universal social security system,” he said, adding that a lot had also been done for the middle-class. Dispelling the impression that the middle-class will be burdened by the higher service tax, Sinha said the Budget, in fact, offers relief in the form of tax savings and improving the quality of life of the middle-class.
“While the previous Budgets have had eight-ten reforms, this Budget had 20 major reform initiatives,” he added.
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