 "Banks slow in monetary policy transmission")
Banks haven’t passed on the benefits of reduction in the repo rate and cash reserve ratio in 2012-13 to their customers in the same proportion as the cut in the rates.
In the year 2012-13, the central bank reduced repo by 50 basis points and CRR by 75 bps. “The weighted average lending rate of banks declined by 36 basis points to 12.17% during 2012-13 (up to February)” RBI said in the policy statement.
Banks, however, are quyick enough to defend themselves. Pratip Chaudhuri, chairman, State Bank of India, said, “RBI hiked the rates eight times. How many times did the banks pass on the hike?”
During the fourth quarter, 39 banks reduced their base rates in the range of 5-75 bps, RBI said.
Industry body Ficci also said that lending rates have not come down in proportion of what RBI has done.
“While the repo rate has been brought down by 125 bps between April 2012 and May 2013, the lending rates have not come down” it said in a statement. Ficci said that base rates have come down in the range of 30-50 bps only. It hoped that today’s cut will result in banks passing the benefit.
In the year 2012-13, the central bank reduced repo by 50 basis points and CRR by 75 bps. “The weighted average lending rate of banks declined by 36 basis points to 12.17% during 2012-13 (up to February)” RBI said in the policy statement.
Banks, however, are quyick enough to defend themselves. Pratip Chaudhuri, chairman, State Bank of India, said, “RBI hiked the rates eight times. How many times did the banks pass on the hike?”
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RBI further said that the modal term deposit rate declined by 11 bps and the modal base rate by 50 bps. “Decline in the term deposit rate occured mostly during the first half, while the modal base rate softened by 50 bps to 10.25% in two steps of 25 bps each during Q1 and Q4 of 2012-13” RBI said.
During the fourth quarter, 39 banks reduced their base rates in the range of 5-75 bps, RBI said.
Industry body Ficci also said that lending rates have not come down in proportion of what RBI has done.
“While the repo rate has been brought down by 125 bps between April 2012 and May 2013, the lending rates have not come down” it said in a statement. Ficci said that base rates have come down in the range of 30-50 bps only. It hoped that today’s cut will result in banks passing the benefit.