RBI asks banks to lower lending rates
DSIJ Intelligence / 03 Aug 2017
A national news agency reported that the Reserve Bank of India (RBI) has said that it was unsatisfied with the MCLR as the banks are not passing on the entire benefit of its rate cuts.
A national news agency reported that the Reserve Bank of India (RBI) has said that it was unsatisfied with the MCLR as the banks are not passing on the entire benefit of its rate cuts.
RBI also stated that it is considering a new market-linked benchmark to ensure a better transmission. The central bank reiterated that there was more scope for banks to lower lending rates in certain segments.
While interacting with the media after the apex bank announced its third bi-monthly monetary policy review for 2017-18, RBI Deputy Governor, Viral Acharya said, "The experience with the MCLR system introduced in April 2016 for improving monetary transmission has not been entirely satisfactory."
He said that the Reserve Bank has constituted an internal study group across several clusters on various aspects of the MCLR system and to explore whether linking of the bank lending rates could be made direct to market determined benchmarks going forward. This group will submit its report by September 24, 2017.
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