This refers to the report "Banks bow to RBI pressure" (April 8). It is interesting to see that three leading commercial banks cut their base rate suddenly after Reserve Bank of India (RBI) Governor Raghuram Rajan warned them for transmitting the benefits of the earlier repo rate cuts, which they were resisting. It is a fact that the RBI monetary policy review is awaited anxiously by the corporate world, government and public, as it affects their planning for various types of loans. That makes loans cheaper or costlier, depending on the quantum of increase or decrease in the repo rate at which the banks normally take money from the RBI. But it is surprising that banks refused to cut rates on Tuesday after the announcement of the monetary policy by the RBI, saying that their respective asset liability committees (ALCOs) would take a call on a rate cut in due course. They vehemently denied that the cost of funds had reduced after two previous repo rate cuts by the RBI.
But within a few hours, these banks (like the State Bank of India, HDFC, and ICICI Bank) made a complete U-turn and made rate cuts. As a citizen and taxpayer of the country, I wish to ask how these and other banks have made a sudden decision when they said that their respective ALCOs would take a decision. It means either their ALCO meeting was called within minutes of the RBI warning or these banks lack professionalism and work under pressure from the RBI and the government.
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But within a few hours, these banks (like the State Bank of India, HDFC, and ICICI Bank) made a complete U-turn and made rate cuts. As a citizen and taxpayer of the country, I wish to ask how these and other banks have made a sudden decision when they said that their respective ALCOs would take a decision. It means either their ALCO meeting was called within minutes of the RBI warning or these banks lack professionalism and work under pressure from the RBI and the government.
K K Mishra Ahmedabad
Letters can be mailed, faxed or e-mailed to:
The Editor, Business Standard
Nehru House, 4 Bahadur Shah Zafar Marg
New Delhi 110 002
Fax: (011) 23720201
E-mail: letters@bsmail.in
All letters must have a postal address and telephone number