Loans won’t get cheaper after RBI cut

Mar 20, 2013 |

Age Correspondent

mumbai

The Reserve Bank cut the repo rate by a quarter per cent from 7.75 per cent to 7.5 per cent Tuesday, but voiced concern over headline inflation and the consumer price index remaining high, saying this left little “headroom” for further cuts. It left the cash reserve ratio unchanged, dashing bankers’ hopes of lowering lending rates on home and personal loans.
The central bank said GDP growth in the third quarter was the lowest in 15 quarters, adding the foremost challenge was to revive investment so that the economy returned to a high growth trajectory. “While a competitive interest rate is necessary for this, it is not sufficient,” it said, adding: “Sufficiency conditions include bridging supply constraints, staying the course on fiscal consolidation, both quantity and quality, and improving governance.” The ball was now in the government’s court, it said.
Industry chambers expressed happiness at the repo rate cut, but were not wholly satisfied as they wanted a deeper cut.

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