With reference to news report ‘Deposit rate hike lags lending rate increase’ ( July 8), against the inflation rate of above 7 per cent, the interest rates being offered by banks for retail depositors fall in the range of 2.90 to 5.50 per cent, which means they are earning negative interest

To enable swift transmission of the RBI’s reference rate, lenders are hiking the lending rates without repricing deposit products. Consequent to the increased lending rate and improved asset quality banks are well-positioned to hike the deposit rates, however, most are effecting only marginal hikes, that too with a lag.

The RBI must advise banks to hike deposit rates to ensure an increase in the real interest to depositors.

VSK Pillai

Changanacherry

RS nominations

The nomination of stalwarts who have carved a niche for themselves through their inspiring feats — music maestro Ilayaraja from Tamil Nadu and sporting icon PT Usha, Karnataka’s renowned philanthropist Veerendra Hegde and Vijendara Prasad, an exemplary story writer of Telangana to Rajya Sabha by the President of India is heartening.

Regardless of whether it is a political master stroke by the ruling BJP government at the centre to widen its electoral footprints in the southern States or not, it reflects the BJP's determination to take every social class on board to make it a party that represents every section of the society.

The BJP's reach out to a slew of backward sections of the society in each State has been paying rich electoral dividends, a fact that the opposition can ignore at their own peril.

M Jeyaram

Sholavandan (Tamil Nadu)

Volatile rupee

This refers to the editorial, ‘Dollar deals’, (July 8).

RBI announced a set of measures to encourage foreign exchange inflows — while many analysts see the current account deficit widening beyond 3 per cent of GDP this year.

This comes at a time when capital outflows have gathered pace as central banks across the world, led by the US Fed, have begun to sharply raise rates.

In an era of tightening global monetary conditions, and capital outflows, with some analysts expecting the current account deficit to touch $100 billion this year, and with net FDI not enough to offset this, the central bank’s policy options will become increasingly limited.

While the forex reserves remain robust, these measures perhaps suggest that the central bank is anticipating pressures ahead. To what extent they will facilitate capital inflows in the near term will be seen in the days ahead.

However, it’s prudent on RBI’s part to encourage capital inflows when India’s macroeconomic indicators are not encouraging.

But, the structural constraints that lie at the heart of the current account deficit — a heavy dependence on imports of crude, coal and gold — are yet to be tackled.

N Sadhasiva Reddy

Bengaluru

Helping street vendors

With reference to the news report ‘Street vendors have a good record of repaying PM SVANidhi loans: Minister’ (July 8). It is heartening to see read street vendors paying the loans taken from Banks honestly and diligently. This should be a lesson to the high-profile borrowers to repay their loans. The NPA level of PSU banks is a constant threat to the economy and should be dealt with with a firm hand by the finance ministry and the RBI.

Waiver of loans, which is driven by political compulsions, also put heavy financial constraints on the banking industry.

In India, we need more banks that will lend to poor farmers, and small entrepreneurs, who mainly depend on moneylenders for their financial needs and who in charge usurious interest rates. The large borrowers need to repay the loans in the larger public interest and benefit of the financial sector.

Venna Shenoy

Thane

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