13 January, 2020
4 Min Read
Syllabus subtopic: Indian Economy and issues relating to planning, mobilization of resources, growth, development and employment.
Prelims and Mains focus: about MCLR and its significance; resaons for private banks not passing on the benefits of interest rate cuts to it customers compared to other banks
News: Private banks were the slowest to pass on the benefits of falling interest rates to their customers in 2019 compared to their state-run and foreign rivals, Reserve Bank of India (RBI) data showed.
The process of setting interest rates by banks is at the core of transmission and the central bank has for several years been trying to make it more transparent. This has led to the change from benchmark prime lending rate (BPLR) to base rate to MCLR and finally to external benchmark-based lending rates.
What does the RBI data show?
Why are private banks showing so much reluctance?
Copyright© Aspire IAS Academy. All rights reserved. Powered by CLT Technologies & Edu-Publishers Private Limited.