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 2012-13, the central bank reduced the repo rate by 50 basis points and CRR by 75 basis points. "The weighted average lending rate of banks declined by 36 basis points to 12.17 per cent during 2012-13 (up to February)," RBI said in the policy statement.
Banks, however, are quick 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?"
RBI said, "Decline in the term deposit rate occurred mostly during the first half, while the modal base rate softened by 50 basis points to 10.25 per cent in two steps of 25 basis points each during Q1 and Q4 of 2012-13."
During the fourth quarter, 39 banks reduced their base rates in the range of five to 75 basis points, RBI said.
The Federation of Indian Chambers of Commerce and Industry (Ficci) also said lending rates had not come down in proportion to what RBI had done. "While the repo rate has been brought down by 125 bps between April 2012 and May 2013, lending rates have not come down," it said. Ficci said base rates had come down in the range of 30-50 basis points only. It hoped that today's cut would result in banks passing on the benefit.
In 2012-13, the central bank reduced the repo rate by 50 basis points and CRR by 75 basis points. "The weighted average lending rate of banks declined by 36 basis points to 12.17 per cent during 2012-13 (up to February)," RBI said in the policy statement.
Banks, however, are quick 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 the modal term deposit rate declined by 11 bps and the modal base rate by 50 basis points.
RBI said, "Decline in the term deposit rate occurred mostly during the first half, while the modal base rate softened by 50 basis points to 10.25 per cent in two steps of 25 basis points each during Q1 and Q4 of 2012-13."
During the fourth quarter, 39 banks reduced their base rates in the range of five to 75 basis points, RBI said.
The Federation of Indian Chambers of Commerce and Industry (Ficci) also said lending rates had not come down in proportion to what RBI had done. "While the repo rate has been brought down by 125 bps between April 2012 and May 2013, lending rates have not come down," it said. Ficci said base rates had come down in the range of 30-50 basis points only. It hoped that today's cut would result in banks passing on the benefit.