After blaming RBI earlier for keeping interest rates high, former finance minister Yashwant Sinha today trained his guns on banks for keeping lending rates high and asked them to pass on the entire 75 basis points cut in the policy rates to borrowers.
"There is a very powerful case for the scheduled commercial banks to cut lending rates by 75 basis points in accordance with the 75 bps cut in the policy rates effected by the RBI," Sinha told reporters on the sidelines of an event organised by the industry lobby IMC here this evening.
Since January, the Reserve Bank has cut the key policy rates by 75 bps in three installments, but banks have reduced their rates only in the range of 15-30 basis points.
"The banks can't hide behind now and they are left with no way other than reducing their lending rates by 75 bps. It is their duty to pass on the benefit of the rate cut by RBI to consumers," he said.
Last month, Sinha had flayed Rajan's monetary policy stance and pitched for a hefty 150 bps rate cut to help the economy wriggle out of the present growth sluggishness.
"Food inflation is down to under 5 per cent, wholesale price index is in the negative zone and the factory production numbers are also down. This is a classic case where a significant reduction in the policy rates should take place ... And the RBI should go in for 150 bps cut in the repo rate," he had said.
When sought reaction on the deficient monsoon forecast and the resultant fall in the markets, he said markets are overreacting to the fear of drought. Even an 87-90 per cent rains will not be a case of crop failure, he said.
Recalling how the Vajpayee government in which he was the finance minister tackled drought in 2002, Sinha said, "We had one of the worst droughts in 2002-03. Still we managed it very well as inflation rose by a mere 2.4 per cent.
