Growth will be short-lived if it’s too fast: Rajan | Business Line

Growth will be short-lived if it’s too fast: Rajan | Business Line

My VIEW:

When Dr Rajan said that RBI was aiming at ensuring that ‘we get
nominal modest rates that satisfy not just very vocal borrowers but also the
silent savers’ 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
providing financial resources 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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