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Chairman & Managing Director,
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| Indian Bank
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| The market was expecting a cut in bank rate, but the RBI has left the rate unchanged. In April, 2003, when the bank rate was reduced by 25 basis points, it was announced that the bank rate would be kept stable unless domestic and international circumstances change.
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| The RBI is continuing a participative and consultative system (which will be further improved) whenever any changes are introduced in the procedures. The guidelines, as RBI reports, will be based on suggestions from various participants.
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| As the matter is under discussion with IBA, RBI has given the freedom to IBA for advising the members.
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| But the requirement of a benchmark prime lending rate with banks actually knowing their costs may be always desirable.
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| RBI has focussed the delivery of credit to priority sector especially to small scale industries (SSIs), where of late there is a slackness.
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| The monetary policy in general is stable, positive and a continuation of earlier policy. The stable policy stances has been helped by the development in the economic front and across-the-board feel good factor.
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| The stress has been on quality credit delivery especially to SSIs and agriculture with adequate safe guards.
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| The policy envisages intense competition in retail and personal segment, therefore it has proposed that banks sharpen their risk assessment techniques so as to guard against any adverse impact on credit quality.
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| The policy observes that there has been noticeable reduction in lending rates for corporate and housing, but reduction in other segments are yet to take place.
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| The policy has stressed on customer service and needs of the common man. The proposal to improve credit delivery mechanism, private sector banking doing government business, ECS payments of IT dividends are the steps towards this direction.
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| The policy also envisages participative and transparent policies and the formulation of various committees with options to give the suggestions are in this direction. |
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