Banks will pass on benefits of rate cut soon: Jayant Sinha

He said strict action would be taken in case of cartelisation on the part of the banks

Jayant Sinha, minister of state for finance, said on Thursday he expected the state-owned banks to pass on the benefits of the latest rate cut by the Reserve Bank of India (RBI) to customers soon, by cutting banks’ own lending rates. He, however, warned if there was any complaint against banks colluding with each other to keep lending rates high, action would be taken.

“In a competitive market, when the rate starts coming down, a few banks will cut lending rates and then everybody will follow. Otherwise, they will lose clients,” Sinha said at a press conference at the Bharatiya Janata Party headquarters here on Thursday.

“If, however, there is any complaint in this regard, anybody can approach the banking ombudsman. If we find, in effect, that there is anti-competitive behaviour, we will take action,” said the minister, adding that strict action would be taken in case of cartelisation on the part of the banks.

On Wednesday, RBI governor Raghuram Rajan had cut repo rates by 25 basis points, a surprise move which was welcomed by the government.