RBI governor's last hurrah: Listen to FM, slash rates

Abstract

The government owns public sector banks and it takes the finance minster to prod them to consider a cut in interest rates. Mind you, the largest government bank, SBI, has declined to take the FM’s hint. SBI’s reluctance should be seen in the context of RBI’s small steps towards rate reduction since April 2012.

Those small steps haven’t inspired banks to take the big leap in reducing lending rates. Are interest rates primarily responsible for the current investment climate?. The government believes so.

But RBI, since June 2012, has been arguing the opposite. The RBI’s Mid Quarter Review of Monetary Policy of June 18, 2012 says, “... it is relevant to assess as to what extent high interest rates are affecting economic growth.

Read more at: https://economictimes.indiatimes.com/opinion/et-commentary/rbi-governors-last-hurrah-listen-to-fm-slash-rates/articleshow/20921167.cms