Banks should pass the interest rate cuts to consumers: CUTS International
New Delhi, Oct 5 (KNN) Soon after the Reserve Bank of India announced a 25 basis point cut in the repo rate, the industry is demanding that the banks should pass the rate cuts to the consumers immediately.
Experts opine that the forthcoming festive season and rationalisation of food prices provides an opportunity to revive demand, and consequently industrial growth.
In the Fourth Bi-monthly Monetary Policy Statement, 2016-17, RBI has cut repo rate by 25 bps to 6.25 per cent. Reverse repo rate under the LAF stands adjusted to 5.75 per cent, and the marginal standing facility (MSF) rate and the Bank Rate to 6.75 per cent. All six members of the monetary policy committee voted in favour of cutting repo rate.
“Such rate cut complements the efforts of government of which is working hard towards institutional and regulatory reforms in the country, the latest such move being passage of constitutional amendment for adoption of goods and service tax,” said an industry expert.
While the government and RBI are doing their bit, the industry, and banks in particular, will have to contribute to revive the consumption led growth cycle in the economy.
Agreeing with the decision to cut rates, Pradeep S. Mehta, Secretary General, CUTS International, noted, “Banks must pass on relief to the consumers, who could then benefit from lower borrowing rates.”
The forthcoming festive season and rationalisation of food prices provides an opportunity to revive demand, and consequently industrial growth, which should not be missed, he added. (KNN Bureau)