The credit policy announced by the Reserve Bank on Wednesday raised hopes of cheaper loans, but the banks have to do a quick reassessment in order to pass on benefits of the RBI’s status quo policy to customers. It is hoped the banks take quick decisions, though some of them feel home loan rates are already low and there’s no need for further reductions. There’s the sticky problem of banks being saddled with non-performing assets. It is heartening that Governor Urjit Patel said the bank was working with the government on this problem.
The RBI is also trying to bring small savings rates closer to savings deposit rates to make banks competitive in attracting savings. What’s intriguing is while banks have a surplus after the November demonetisation, they are still not lending as they should. It was hoped the RBI would cut rates to promote growth. But to be fair, the central bank shouldn’t have to bear this responsibility. The government must get its act together and find ways to get the economy on the growth path. Finance minister Arun Jaitley recently said the government was examining why investment is still not happening, and he implied it might start in the near future as companies unwound their excess capacity built during booms period.
