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NITI urges banks to pass on RBI rate cut benefits
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SME Times News Bureau | 23 Feb, 2019
Government think tank Niti Aayog Vice Chairman Rajiv Kumar on Friday
said banks are in a position to pass on interest rate cut benefits to
the consumers and the industry.
The Reserve Bank of India (RBI)
had on February 7 announced a repo rate cut of 25 basis points, and so
far State Bank of India (SBI) is the only bank to have followed it with a
small rate cut of 5 basis points.
"Credit growth has perked up
and will increase further, so banks are in a position to pass on the
benefits of a rate cut," Kumar said at an event.
He said the government had to struggle through NPAs in the banking sector.
"We
inherited a banking sector with NPAs worth Rs 10.5 lakh crore. But now
that struggle seems to be over and the banking sector is looking up
again indicating that the interest rate cut be passed on for the growth
of the economy," said Kumar.
Speaking at the event, Punjab
National Bank (PNB) MD and CEO Sunil Mehta said, "Deposit rates are our
sources of funding. The moment this funding goes down, we won't be able
to serve our customers."
On Thursday, Reserve Bank Governor
Shaktikanta Das had met CEOs and MDs of public and private sector banks
to persuade them to pass on benefits of lower interest rates to the
consumers.
But the banks expressed their concerns on protecting
margins to provide for the NPAs and banking operations, which, they
said, may be hit if they start passing on the full rate cut to
consumers, without any headroom.
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