Passing on rate cuts (transmission) has been slower than what it should be for some quarters now. Banks’ borrowing costs have not been coming down. Their bad loans remain high, and recovery.

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Are we being unfair when we constantly fret over the slow transmission of interest rates by banks when the repo rate is cut? This has become a habit of late, one where there is a lot of concern.

banks are more likely to respond positively to these cues and correct the deficit in transmission of rate cuts to borrowers,” added Agarwal. Whatever be the case, property developers and industry.

Earlier this month, the Reserve Bank cut the benchmark interest rate by 0.25 per cent to 6.25 per cent. However, only a handful of banks, including SBI, have reduced their rates, that too by just 0.05 per cent. On the MSME restructuring scheme, Das said RBI recently announced a package for units having outstanding loans of up to Rs 25 crore.

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It was widely expected that the RBI would cut rates to stimulate growth. Further, global interest rates are going down and there is no immediate threat on the inflation front. We welcome this move and hope that rate transmission happens at a faster pace," said Suraj Kaeley, Senior Adviser At Fundsindia.

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“The RBI is. the expected transmission of the past two policy rate cuts." As for growth, the outlook is not sanguine. Global growth is expected to slow markedly during 2019 and both the.

"This should enable monetary transmission, thereby making this rate cut a cut above the rest," said Parthasarathy. CEOs have complained that high interest rates have blocked their investment.

The RBI rate cuts haven’t really lost their ability to boost economic growth. The fact is that in India, the transmission of the RBI rate cuts depends on factors that differ from those in other countries. People should not expect their bank’s interest rates to come down by the same amount if as the RBI’s repo rate.

However, what did stand out in the text of the statement was that transmission by banks has been abysmal, despite the best efforts of RBI Governor Shaktikanta Das to play it down as a normal lag in policy rate transmission. As per the RBI, despite the reduction of 50 basis points in repo rate before today, the transmission by banks averaged just 21 bps in pricing of new rupee loans.