Amid rate cut chorus, Rajan warns against quick fixes | Business Standard News

Amid rate cut chorus, Rajan warns against quick fixes | Business Standard News

My VIEW:

When RBI Governor said that ‘For us at RBI, the key task is to
keep inflation low-not just today but well into the future, so that we get
nominal modest rates that satisfy not just very vocal borrowers but also the
silent saver’ Dr Rajan was speaking not only to defend the RBI position on  monetary policy management, but elegantly
putting across the need to protect the interests of those who are the source of
funds  for the nation, namely savers, if
growth is to be sustainable.
The short message from the governor is also addressed to all borrowers
including government, not to hurt the real lenders (savers) by using their
muscle power and lobbying expertise. The plea from RBI for passing on the
benefits of rate cuts so far also need to be taken seriously by banks.
Mentioning that just one bank(HDFC Bank) had passed on substantial benefits from
the 75 basis point base rate cut in recent months to the borrowers and the
median base lending rates of banks has fallen around 30 basis points only, he
has made RBI’s expectation from the banks clear.
Dr Rajan has also warned banks against keeping lending rates high,
as withholding transfer of benefits from the earlier rate cuts will end up in a
rise in big borrowers’ dependence on debt markets.
M G Warrier, Mumbai



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