Economy

Will meet bank heads on Feb. 21 to discuss rate cut transmission, says Shaktikanta Das

Union Finance Minister Arun Jaitley and RBI Governor Shaktikanta Das during the 575th Central Board Meeting of RBI in New Delhi on February 18, 2019.

Union Finance Minister Arun Jaitley and RBI Governor Shaktikanta Das during the 575th Central Board Meeting of RBI in New Delhi on February 18, 2019.   | Photo Credit: PTI

Earlier this month, the RBI had cut the benchmark interest rate by 0.25% to 6.25%.

Reserve Bank of India Governor Shaktikanta Das on Monday said he would be holding a meeting with the heads of all banks to discuss the issue of transmission of rate cuts by the central bank to the actual loans being disbursed by the banking sector.

Earlier this month, the RBI had cut the benchmark interest rate by 0.25% to 6.25%, but only a few banks have so far cut the interest rates on their loans following the move.

“Transmission of rates is very important, especially after the central bank announces a rate cut,” Mr Das said at a press conference following the RBI Board’s meeting with Finance Minister Arun Jaitley.

“As already stated in our post-Monetary Policy Committee press conference, I am having an interaction with the CEOs and MDs of the banks, both public and private sector, which is now scheduled to be on February 21,” Mr Das added. “We will discuss that issue with the banks and see what needs to be done.”

Speaking on the further consolidation of the banking sector and the mergers of banks, Mr Jaitley said that the economies of scale available to bigger banks was useful.

“I think India needs fewer and mega banks which are strong because in every sense, from borrowing rates to optimum utilisation, the economies of scale as far as the banking sector is concerned, are of great help,” Mr Jaitley said.

The Finance Minister also said that the revenue growth over the last five years has been strong, which has allowed the government to finance social sector schemes in a way that was difficult in the preceding years.

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Printable version | Apr 8, 2020 10:13:11 PM | https://www.thehindu.com/business/Economy/will-meet-bank-heads-on-feb-21-to-discuss-rate-cut-transmission-says-shaktikanta-das/article26302485.ece

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