Letter to BS: SBI's repo-linked rates move has opened a new window

The transmission of the policy rates into the economy will be complete if only all the financial intermediaries pass it

This refers to “Quicker transmission” (March 11). Despite the growing competition among the financial intermediaries for garnering low-cost resources, the State Bank of India linked its interest rates on savings deposit, overdrafts and cash credits on the threshold limit above Rs 1 lakh with the repo rate of the Reserve Bank of India. Accordingly, the rate on savings deposit above Rs 1 lakh is repo rate (6.25 per cent) minus 2.75 per cent that comes to 3.5 per cent and for cash credits and overdrafts above Rs 1 lakh, it is 6.5 per cent (6.25 plus spread of 2.25). The