Banks Urged To Lower Trade Costs

The government today said that banks should lower transaction costs to pass on the benefits of lower interest rate regime to consumers.

The issue would come up for discussion at the meeting of chiefs of public sector banks with finance minister Yashwant Sinha slated for June 19, economic affairs secretary C M Vasudev said here.

The meeting has, however, been postponed since Sinha will be addressing a meeting in Singapore on that day.

"There is a feeling that benefits of lower interest regime have not yet fully reflected in the cost of borrowing by customers. Finance minister would take up this issue with the bank chiefs later this month," he said. Sinha would review the performance of the banks at the meeting to be held in Mumbai.

 

Asked if there could be any benchmarking for transaction costs of banks in India, Vasudev said it could not perhaps be possible. However, the cost of transaction could come down with banks gradually reducing their non-performing assets, he said adding that at present banks also build in the cost of non-performing assets (NPAs) in the transaction costs.

Stating that there was a reduction in NPAs of banks, he said, "NPAs in India are lower compared to other east Asian nations. Provisioning for these is strong and we have transparent accounting practices which is at par with international standards."