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Limit to lowering interest rates, says SBI chief
TIWN
Limit to lowering interest rates, says SBI chief
PHOTO : TIWN

New Delhi, Dec 22 (TIWN) SBI Chairman Rajnish Kumar on Saturday said that banks cannot lower interest rates beyond a threshold due to asset-liability mismatch issues.

"We can't lower the interest rates without lowering the interest rate for depositors and there is a threshold below which we cannot reduce the interest rate for deposits," he said at the FICCI's 92nd Annual Convention, titled "India: Roadmap to a $5 Trillion Economy".

On transmission of monetary policy, there has been constant nudging from the Reserve Bank of India to pass the reduction in repo rates by the whole amount to make the retail loans cheaper for consumers in a big push for consumption. This theory is not bought by the commercial banks who argue if they do 100 per cent transmission, then they will have no margin and will have to lower the deposit rates.

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