The RBI’s intention is to reduce the cost of funding for financial institutions and guard against rising inflationary pressures and mitigate external shocks, said M. Narendra, Chairman and Managing Director, Indian Overseas Bank, about the regulator’s policy review.
He said short-term money market rates and deposit rates will come down immediately and give relief to banks. The start of busy season will increase demand for credit and if the liquidity dries up from current levels, driving up the cost of resources again, banks may have to consider revisiting their lending rates , he said. RBI has taken into account several global factors, including the recovery in advanced economies, slowing activity in emerging economies, heightened financial market turbulence and uncertainties, he said.
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