Banks fail to pass policy rate benefits to customers: Survey
The soft monetary policy stance of the RBI in the face of inflation turning to near zero, could not be fully passed on the customers as banks grappled with the high cost deposits, Economic Survey said.
By PTI |
NEW DELHI: The soft monetary policy stance of the RBI in the face of inflation turning to near zero, could not be fully passed on the customers as banks grappled with the high cost deposits, Economic Survey said.
Despite monetary policy becoming accommodative in third and fourth quarter, decline in interest rates were not up to the industry expectations, said the Survey tabled in Parliament today.
Though nominal rates eased by 100-150 basis points, real rates continued to be high, it said.
Moreover, it said, the expectation that there could be further cuts in policy rates and in lending rates may have resulted in investment decisions being deferred.
Blaming structural rigidity coming in the way of reduction in the lending rate, the survey said, it may have been reinforced in recent years due to a high credit demand encouraging the banks to raise deposits at higher rates for maintaining long term liquidity.
"These high rates have now come in the way of cutting lending rates at a pace which is consistent with the current outlook on inflation and the need for stimulating demand," it said.
Despite monetary policy becoming accommodative in third and fourth quarter, decline in interest rates were not up to the industry expectations, said the Survey tabled in Parliament today.
Though nominal rates eased by 100-150 basis points, real rates continued to be high, it said.
Moreover, it said, the expectation that there could be further cuts in policy rates and in lending rates may have resulted in investment decisions being deferred.
Blaming structural rigidity coming in the way of reduction in the lending rate, the survey said, it may have been reinforced in recent years due to a high credit demand encouraging the banks to raise deposits at higher rates for maintaining long term liquidity.
"These high rates have now come in the way of cutting lending rates at a pace which is consistent with the current outlook on inflation and the need for stimulating demand," it said.
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