Mumbai: A look at the recent past shows that rate cuts by the central bank are transmitted further to the end-consumer in a proportionate manner.
“The weighted average call money rate WACR has declined by 78 bps, market repo rate has come down by 73 bps....banks, on the other hand, have reduced their interest rates on fresh rupee loans by only 29 basis points so far, during February to June,” RBI Governor Shaktikanta Das told reporters here after the monetary policy meet.
Umesh Revankar, MD and CEO of Shriram Transport Finance, said: “We welcome the RBI’s decision of 35 bps cut. This rate cut is in line with our expectations in current economic conditions. With a total of 110 bps cut in 2019, we expect the banks to be in a comfortable position to do the transmission of the same.
“As the economy is going through a downturn, largely on account of falling demand and consumption, the latest repo rate cut to 5.40 per cent, is expected to boost sentiments. But it would only happen once consumers get the ultimate relief with lower rates.”
For a common man, a middle-class consumer, a house and a car are among the most dreamt possessions in life, and these two amenities are at the heart of the banks’ lending business.
Amit Modi, Director, ABA Corp said: “Rather than making sure that consumers are offered reduced interest rates on home loans which will result in lower EMIs, there is still an ongoing tendency of cushioning the bottom lines by the banks, which ultimately turns out to be counterproductive to the move itself.
“The Monetary Policy Committee has once again maintained an accommodative stance. We hope that the banks are also more accommodative in their stance towards the home buyers aspirations.”
In another major development, country’s largest bank State Bank of India (SBI) cut its benchmark lending rates by 15 basis points across all tenors, shortly after the central bank slashed interest rates by a larger-than-expected 35 bps to boost the economy in a solidarity to support growth. It is expected that other banks too would follow suit and the consumers would take a sigh of relief. (IANS)