INSUBCONTINENT EXCLUSIVE:
Niti Aayog's Vice Chairman, Rajiv Kumar, said on Friday that banks are in a position to pass on the benefit of the rate cut by the Reserve
Bank of India to the consumers and the industry
The central bank had on February 7 announced a cut of 25 basis points in repo rate, and so far State Bank of India (SBI) is the only
commercial lender to have followed it with a small rate cut of 5 basis points."Credit growth has perked up and will increase further, so
banks are in a position to pass on the benefits of a rate cut," Mr Kumar said at an event.He said the government had to struggle through
non-performing assets (NPAs) in the banking sector."We inherited a banking sector with NPAs worth Rs 10.5 lakh crore
But now that struggle seems to be over and the banking sector is looking up again indicating that the interest rate cut be passed on for the
growth of the economy," said Mr Kumar.Speaking at the event, Punjab National Bank (PNB) managing director and CEO Sunil Mehta said, "Deposit
rates are our sources of funding
The moment this funding goes down, we won't be able to serve our customers."On Thursday, RBI Governor Shaktikanta Das met CEOs and MDs of
public and private sector banks to persuade them to pass on benefits of lower interest rates to the consumers.But the banks expressed their
concerns on protecting margins to provide for the NPAs and banking operations, which, they said, may be hit if they start passing on the
full rate cut to consumers without any headroom.
