Being a practical banker himself in his previous avatar,What ever Mr Chakrabarty has said has to be accepted at face value.The bankers do not bring down their rates in tandem with the RBI's policies is a fact and needs to be admitted.Banks have ample scope to reduce their interest rates for borrowers by reducing their spread by atleast 0.50 percetage,reducing the NPAs by being very strict with recalcitrant borrowers,improving their profit margin by bringing in efficiency in asset liability management particularly cash management,operational levels by avoiding wastages,etc. They want to pass on the blame to RBI for high interest rate without bothering to improve their own working in different areas.Good that RBI Dy Governor has highlighted this. RBI can carry out a random scrutiny of interest rates charged to various classes of borrowwers and observe that small borrowers are subsidising larger borrowers.Big borrowers who make a hue and cry enjoy lower rate of interest and dictate.

from: Dr.T.V.Gopalakrishnan

Posted on: Sep 19, 2012 at 07:44 IST

 

(This is in response to Banks do not pass on the benefit to customers RBI DY Governor appeared in Businss Line)