Depositors lose interest on deposits and to keep deposits in banks.

If some one were to make a study of the Net Interest Margin (NIM) before and after the RBI's policy announcement, it can be conclusively proved that either the NIM would have gone up or would  be maintained at the level obtaining before the policy. All the banks have reduced the deposit rates by 1.25% and 1.5% and the base rate cut has been in the range of 0.5 % and the maximum of 0.75%. As long as the banks are inefficient in dynamically managing their assets and liabilities  in a highly professional manner and their performance is judged by the NIM they manage to exhibit, the transmission of rate cut by the banks will be akin to chasing a mirage. Dr SubbaRao former Governor was harping on this but without any tangible change. The net result would be depositors will lose their interest on deposits and the interest of keeping money with the banks. The borrowers will continue to loot in all forms and the economy and the tax payers will ultimately bear the brunt. Dr T V Gopalakrishnan