Govt. should direct banks to reduce interest rates, says Mohandas Pai

Former Infosys Director T.V. Mohandas Pai on Tuesday welcomed the Reserve Bank of India's(RBI) decision to cut the repo rate, but at the same time urged the government to send a strong message to the commercial banks to reduce their interest rates.

"This a good news by the RBI, but banks should also reduce interest rates. Common man is going to be hurt, because deposit rates are going to come down and unfortunately a lot of Indians depend on the bank deposit rates, specially the retired people. The banks are not reducing interest rates. I hope, the government sends a strong message , that they must not get the monopoly conditions and push then to cut the rates," Pai told ANI here.

"In a sort of a way, the RBI has sent a message that people should start investing again, as investment is not picking up, the economy is not picking up and growth rate has come down to 7.4 percent," Pai added.

RBI Governor Raghuram Rajan on Tuesday announced a cut in the Repo Rate by 50 bps to 6.75 percent, while the Cash Reserve Ratio(CRR) remains unchanged at four percent.