RBI guv to meet bank heads on MPC decision

Das admitted that credit growth by banks is not as broad-based as he would have expected that to be.

As transmission of Reserve Bank of India's interest rate cut to borrowers remains a sticky issue, Governor Shaktikanta Das is scheduled to meet the heads of public and private sector banks on February 21 to discuss with them the way forward.

“The transmission of monetary policy decision is very important especially after the RBI announces a rate cut,” Das told reporters on being asked why the banks are giving too little and too late to consumers.

Das said this while addressing a press conference jointly with Finance Minister Arun Jaitley after a central bank Board meeting in which Jaitley apprised the banks of interim Budget steps.

The governor said he would meet the CEOs and MDs of both public and private sectors banks on Thursday and try to sort out the issue.

The RBI, in its monetary policy review earlier this month had handed out a 25 basis point cut in the policy repo rate but banks did not respond by cutting their lending rates post that except the largest lender State Bank of India reducing the home loan rates by 5 basis points from 8.75% to 8.70%.

Banks have complained that their hands are tied on cutting lending rates because it has to go hand-in-hand with a similar cut on deposit rates, which they cannot do at present due to various factors.

On MSME loans too, the Governor said the banks have to come forward and reduce rates for small and medium enterprises and make loans cheaper for them after the RBI has eased rules.

Das admitted that credit growth by banks is not as broad-based as he would have expected that to be.

“Some credit growth is visible but credit is not flowing to all sectors as it should,” he said. The RBI data released last week showed credit growth has not picked up majorly to industries and it is the housing loan among the personal segment that has been dominating much of the credit space.

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RBI guv to meet bank heads on MPC decision

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