The Reserve Bank has given occasional voice to the concern that bank interest rates are not high enough to offer savers a return, over and above the rate of inflation (ie, a ‘real’ rate of return). This and the collapse of the housing market has led in recent times to more money flowing into mutual funds than ever before; much of the inflow has found its way to debt instruments that have given better returns than banks. However, when it comes to credit, the situation is reversed: the banks charge higher rates because they have to cover large operational costs.
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