In a meeting with public sector banks, Finance Minister Pranab Mukherjee has urged banks to cut the lending rates within three weeks. This comes close on the heels of ICICI bank cutting lending rates last week.
The graph below depicts that the gap between deposits and credits has increased in the recent months as borrowers still find the rates high. As per the latest weekly statistical supplement of RBI, the deposits have increased by 22.6% from last year, whereas the growth in bank credit has risen by 15.9% (year-on-year). The only way to stimulate the economic activity is to offer reasonable rates to borrowers.
Bank Deposits and Credits
(Source: www.rbi.org.in)
If the rates decline, then borrowers would stand to benefit. Those who are still looking for credit to buy house, vehicles or for any other purposes, may look forward for this decline in trend.
by PersonalFN
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