Passing on rate cuts (transmission) has been slower than what it should be for some quarters now. Banks’ borrowing costs have not been coming down. Their bad loans remain high, and recovery.
The transmission has been only 29 basis points thus far, in spite of the rate cuts being 75 basis points before the current cut. If you add the accommodative stance, the effective impact should have.
However, the transmission of the rate-cuts to the end-consumers has remained very gradual and relatively lower than the repo rate revisions, it said. The CII said the RBI should cut cash reserve.
RBI governor is meeting private and public sector bank chiefs on February 21 to discuss the issue and ensure the transmission of rates. However, banks say it might take another rate cut in April.
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Banks have always been reluctant to reduce interest rates whenever there is a rate cut by the RBI. “Whenever there is policy rate reduction, it would be RBI’s expectation that monetary transmission ..
For loan up to Rs 75 lakh, the home loan interest rate will vary between 8.05 per cent and 8.20 per cent, depending on the.
Consequent to the rate cuts by the RBI. banks should pass on the rate benefit to customers. That is precisely the point I have highlighted and stressed in our interaction with PSBs. The conditions.
Should transmission have preceded RBI’s rate cut?. The Reserve Bank of India (RBI) announced a rate cut of 25 basis points at its monetary policy meeting on 7 February, but there has been a lot of apprehension about how much of this will actually.
With a fresh cut, and assuming the same rate of transmission. you should also have a long-term horizon of 3-5 years so that you can make the best of the market cycles. Keeping in line with boosting.
RBI Delivers an ‘Out-of-the-Box’ Rate Cut. What Next? When will investment revival take place, given the bottlenecks in the transmission mechanism?
“The rate cut could have been higher. can park excess funds with the RBI – being reset at 6 per cent. “The steps announced to ease liquidity should help in effective transmission of lending rates.