RBI Rate Cuts: Banks’ Lending Lags, Consumers Bear the Brunt
A new report by CareEdge Ratings reveals a concerning lag in the transmission of Reserve Bank of India (RBI) policy rate cuts to borrowers. While the RBI has implemented rate reductions, these benefits aren’t fully reaching consumers.
The report highlights that outstanding loan books reflect only a partial impact of these cuts. Fresh loans, it suggests, are being disbursed at significantly higher margins than expected.
This disparity indicates a disconnect between RBI policy and its on-ground effectiveness. Banks, it seems, are not fully passing on the benefits of lower interest rates to borrowers.
The findings raise serious questions about the efficacy of monetary policy transmission in India. This impacts consumers struggling with high borrowing costs and hampers economic growth. The government needs to address this crucial gap to ensure fair lending practices and stimulate economic activity.
