Imperative for banks to expand balance sheets: India Ratings report

The RBI's conscious steps to reduce the repo rate have also lowered the marginal cost of fund-based lending rate across banks, ratings agency said

It is imperative for banks to expand their balance sheets and revive credit offtake instead of just concentrating on asset quality, says a report.

The RBI's conscious steps to reduce the repo rate have also lowered the marginal cost of fund-based lending rate across banks, ratings agency India Ratings and Research said in a note.

The central bank has reduced repo rate by 250 basis points since February 2019. However, the transmission of rate cuts has been uneven among private and public sector banks, the note said.

"We believe that it will be imperative for banks to expand balance sheets and simultaneously revive