Banks have to cut deposit rates for bond yields to fall: RBI

Reserve Bank Deputy Governor, K C Chakrabarty, today said that rise in bond yields was not a concern for the central bank and yields would come down only if banks cut their deposit rates.

"Unless banks cut deposit rates, I don't see bond yields coming down," Chakrabarty said on the sidelines of a FICCI-IBA banking conference here.        

The government's huge borrowing scheduled for FY 10 to the tune of Rs 4.5 lakh crore, did not cause any concern for the system and is being conducted in a smooth manner, Chakrabarty said.        

Banks' restructuring of defaulted loans is a continuous process and banks have been doing the restructuring when difficulties arise, Chakrabarty said.        

The country's rural co-operative banking sector was facing problems, Chakrabarty said, adding the central bank is committed to resolving those issues by introducing adequate measures.        

"There are some problems...We are trying to improve. We are trying to take care of the institutional part," Chakrabarty said.        

He said that there was a need for effective implementation of technology products in the banking sector to achieve the goals of financial inclusion in the country.