26.7 C
New Delhi
Thursday 24 October 2019
Economy Das: Expect quicker transmission of rate cut by banks

Das: Expect quicker transmission of rate cut by banks

On the impact on fuel price hike on inflation, RBI Governor Shaktikanta Das said it will take time for transmission to happen


- Advertisment -

New Delhi: After delivering three back-to-back rate cuts, RBI Governor Shaktikanta Das said on Monday it expects a quicker transmission of the interest rate cuts by banks to consumers by way of cheaper home, auto and personal loans.

During this year, the RBI reduced the key policy rate thrice with an aggregate reduction of 0.75 % point in the repo rate, the rate at which RBI lends to banks.

“In the last MPC meeting (6 June) I had said that by that time 50 basis points of repo rate cut had been announced, and out of this 21 basis points had been transmitted. And one positive thing that is happening now is, earlier it used to take six months for transmission, now the transmission is taking a much shorter period of 2-3 months,” RBI Governor Shaktikanta Das said.

“Thereafter we announced 25 basis points cut. So, it’s now entirely 75 basis point cut. We are collecting the data and also you have to keep in mind that right from the month of June, in fact, 1 June, the system is more than adequately surplus in liquidity,” he said while addressing media after the customary post-budget meeting with Finance Minister Nirmala Sitharaman.

He further said overall the system liquidity is hugely in surplus and if individual banks have liquidity issue, the RBI will provide liquidity support to them.

The Budget has announced a 10 % backstop for the banks to implement NBFC package as part of a series of steps to give relief to non-banking financial companies facing cash crunch following the collapse of IL&FS last year.

In a bid to address the stress in the sector, the government in the Budget proposed that public sector banks would purchase high-rated pooled assets of financially sound NBFCs, amounting to a total of Rs 1 lakh crore during the current financial year.

For this, the government will provide one time six months’ partial credit guarantee to public sector banks for first loss of up to 10 %.

With regard to the shadow banking sector, the governor said the RBI is monitoring NBFCs based on their size and based on their past repayment behaviour.

“We are monitoring their operations very closely and at regular intervals,” Das added.

On the impact on fuel price hike on inflation, Das said it will take time for transmission to happen.

The Monetary Policy Committee will meet in the first week of August, and will assess this, he said, adding that “there could be a marginal increase, but it’s not that, next day itself, it will impact inflation. It takes time for transmission.”

Post the rise in fuel taxes announced by the government in the Budget for 2019-20, prices of petrol and diesel rose by at least Rs 2.4 and Rs 2.36 a litre respectively across metro cities.

The prices increased after the Finance Minister raised excise duty and road and infrastructure cess by Rs 2 per litre on both the fuels.

Asked about the government move to infuse Rs 70,000 crore in the PSBs, Das said it is a very positive development because it not only enables banks to maintain the capital they need to comply with the regulatory requirements.

It will also give enough capital to the banks to step up their lending and credit disbursement and auger well for the banking system, Das added.

Subscribe to our newsletter

You will get all our latest news and articles via email when you subscribe

The email despatches will be non-commercial in nature
Disputes, if any, subject to jurisdiction in New Delhi

Leave a Reply


Aaditya Thackeray, Shiv Sena’s Existential Gambit

With leaders deserting Shiv Sena or debilitated with age, the party's footprint shrinking and Uddhav lacking Balasaheb's charisma, Aaditya had to step in to maintain the dynasty that has mostly been betrayed when politicians not from the Thackeray family were trusted

Karva Chauth: Faith, legend behind viewing the moon through a sieve

The legend and Karva Chauth rituals vary across Rajasthan, Uttar Pradesh, Himachal Pradesh, Madhya Pradesh, Haryana, Punjab, Delhi and, in south India, Andhra Pradesh

Pakistan-Occupied Kashmir, Here We Come!

Study Wuhan and Mamallapuram in the backdrop of the fact that things are not quite working out in China-Pakistan economic relations, notwithstanding the urge of the communist state to contain India and that of the Islamic state to challenge it

Slowdown Has Reasons Other Than GST, Demonetisation

When all economic sectors decline, the mood of the market turns sombre, turning investors all the more reluctant to pump in money; the interdependence of industries means that the slowdown suffered by one would affect many

Where China & India, Resisting & Improving Democracy, Meet

What you see in Hong Kong is China resisting democracy; what you see in Kashmir is India promoting it; a reasonably capitalist China does not offer freedom politically but India, held back at times by the choice of the people, is still opening up; there could be a point of convergence as the two nations move in opposite directions
- Advertisement -


Unauthorised colonies in Delhi to be regularised: Modi Cabinet

The Modi government has finally come to terms with the ghastly sight of unauthorised colonies in Delhi that the Kejriwal dispensation had embraced long ago for votes

Ganguly on Dhoni: Champions don’t finish quickly

I have always said when I was left out and the entire world said 'I will never make it'. I came back and played for four years. Champions don't finish very quickly: Sourav Ganguly

Rabi crop growers to get higher MSP, Cabinet decides

The Cabinet has decided to grant a higher MSP for rabi crops recommended by the CACP; it will cost the exchequer an additional Rs 3,000 crore

Pension to arrive late by 2 years, but workers will not complain

Pushing the age of pension by two years, the government will save Rs 30,000 crore; the amount it owes to EPFO has been accumulating since 2014-15

Jharkhand sees pre-election opposition exodus to BJP

An exhaustive list of deserters among politicians of Jharkhand where switching parties is commonplace both pre-poll and post-election

You might also likeRELATED
Recommended to you

%d bloggers like this: