FM Sitharaman: Will ensure that Banks Pass on Rate Cut Benefit to borrowers
Finance Minister Nirmala Sitharaman said that authorities will make sure that public sector and private banks pass on the benefits of rate cuts to consumers. The Reserve Bank of India reduced repo-rate last month to historic low of 4 percent but many economic experts were of the view that banks may not pass the rate cut benefits to end consumers and borrowers. Finance Minister has now clarified that banks will pass on the rate cut benefit to borrowers.
A large part of Indian government’s help to economy and business owners was in form of easier credit and lower interest rates. And, implementation of these measures heavily depends on the banks. As majority of public sector banks are facing tough times due to NPA issue, economists were concerned if banks will be quick to lend money to people and businesses in need, even when the government is acting as a guarantor. Banks won’t be interested in stressing their balance sheet even further with high risk loans.
In a Twitter message, industry body PHDCCI said, “Hon'ble @FinMinIndia @nsitharaman request @phdchamber to continue its good to work in sending continuous representations to improve & restart the industry effectively & continue development & economic growth of #India.”
Small and medium Indian business owners might need help in terms of funding as they restart their operations after COVID-19 lockdowns. It is also to be seen how the demand will be impacted after the lockdowns have been lifted. It is quite possible that consumption declines as many people would be worried about their jobs and savings that have been depleted due to three months of lockdowns as India fights with COVID-19 pandemic.