Is the Government Indirectly saying, to enter the markets now??!!
MUMBAI: The finance ministry is nudging state-owned banks to cut lending rates before March-end, though most lenders had initially taken a stand to review interest rates only next financial year.
This has not been communicated in writing, but at a recent meeting, senior ministry officials asked bank chiefs to consider lowering interest rates.
Even after the Reserve Bank of India cut banks' cash reserve ratio (CRR) in January, signalling a reversal in its monetary policy stance, bankers had said it would take a while for lending rates to soften.
Since CRR is the slice of customer deposits that banks have to keep as cash with the RBI, a cut in the ratio following repeated rate hikes was perceived as the onset of a dovish monetary policy. But since no bank has lowered returns on deposits since the RBI action, their cost of fund continues to be high.
This has not been communicated in writing, but at a recent meeting, senior ministry officials asked bank chiefs to consider lowering interest rates.
Even after the Reserve Bank of India cut banks' cash reserve ratio (CRR) in January, signalling a reversal in its monetary policy stance, bankers had said it would take a while for lending rates to soften.
Since CRR is the slice of customer deposits that banks have to keep as cash with the RBI, a cut in the ratio following repeated rate hikes was perceived as the onset of a dovish monetary policy. But since no bank has lowered returns on deposits since the RBI action, their cost of fund continues to be high.
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