Challenge for banks to pass on the benefits of rate cut: IOB Chairman

Posted By: Religare
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Challenge for banks to pass on the benefits of rate cut: IOB
Indian Overseas Bank: Quotes, News
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Indian Overseas Bank (IOB) said it would be difficult for the banks to pass on the benefits of the rate cut to encourage growth owing to conservative rate cuts executed by RBI.

M Narendra, IOB Chairman and Managing Director said. "....RBI has guardedly reduced the policy rates by 25 basis points. Growth-inflation dynamics in the current quarter will decide whether the regulator will follow this up with further cuts."

"Against this, recovery in growth is expected to be gradual through 2013-14, which again depends on global commodity price trends."

"It will be, therefore, a challenge for banks to pass on the benefit of the rate cut to push growth and consumption demand without impacting the already slowing deposit growth."

About 0.25 per cent cuts in CRR, IOB Chairman said, "With the government not going for additional borrowings, the full benefit of the CRR cut will flow into business."

"There is a clear case for policy transmission on lending rates by banks. It is for the industry and business to respond positively so that the current cuts in interest rates continue to trend down," he said.

Read more about: iob, interest rates
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