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| CPI-WPI gap affects ability to cut deposit rates, says Thorat |
| BS Reporter / Kolkata Jun 27, 2009, 00:12 IST |
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 The huge difference between consumer price index (CPI) and wholesale price index (WPI) confronts banks while reducing deposit rates, according to Usha Thorat, deputy governor, Reserve Bank of India (RBI).
While CPI has been around 10 per cent, WPI has been hovering at (-)1.14 per cent.
“There is a fair divergence between CPI and WPI, which has to be taken into consideration by banks while reducing interest rates on deposits,” Thorat said.
On being asked if higher interest rates on small saving schemes were putting pressure on banks, she said, “It is a complex issue and one has to balance many interests. It has been taken up with the government.” Meanwhile, she said the RBI was mulling viability gap funding for banks for opening branches in the North-East.
“Opening bank branches in the North-East is a challenge as commercial banks do not find it viable. RBI is prepared for viability gap funding. We will see how this experiment works. We encourage banks to associate with local grassroot-level community-based organisations to take banking facilities in the areas,” she said.
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