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Lack of capital prevents banks from transferring rate cuts: RBI staff study

Markets do not view banks with low capital favourably and offer funds at a higher rate, says study done independently.

Topics
Reserve Bank of India | RBI Policy | RBI

Anup Roy  |  Mumbai 



Lack of capital prevents banks from transferring rate cuts: RBI staff study
The sensitivity of borrowings by the banks to CRAR is much higher for public sector banks as compared to all banks

are unwilling to pass on policy rate cuts by the (RBI) because they lack capital, a working paper by the staff of the central bank has said. The government, therefore, should infuse more capital in state-owned for healthy credit growth at a cheaper rate.

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First Published: Sun, October 18 2020. 11:41 IST

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