RBI eyes faster transmission; bankers say immediate rate cut difficult

Loans linked to policy repo rate to fall

Notwithstanding the rate cut of 50 basis points through two moves by the central bank since February, bankers are of the view that deposit tightness in the system — resulting in competition among lenders to attract money from customers — will likely prevent them from reducing deposit rates immediately.

 

This comes even as Reserve Bank of India (RBI) Governor Sanjay Malhotra on Wednesday said the central bank aimed at a quick transmission of the rate cut through the banking system.

 

As a result, lending rates, especially the ones linked to the marginal cost of funds-based lending rates (MCLR), are unlikely