Arun Jaitley nudges banks to pass on rate cut benefit to borrowers
Jaitley said rate cut will reduce the cost of funds and help economic recovery
New Delhi: Finance Minister Arun Jaitley welcomed Reserve Bank's cutting the key interest rate by 0.5 per cent, nudging banks to transmit the benefit to borrowers so as to boost investments and the economy.
The rate cut, he said on Tuesday, will reduce the cost of funds and help economic recovery.
"This decision of the RBI will significantly provide policy support to the real economy and help in the recovery process. We are looking forward now to the transmission of these cuts which will effectively help to boost confidence and investment. They will also help to realise the economy's medium term potential growth rate," Jaitley told reporters.
RBI in its fourth bi-monthly monetary policy for the current fiscal reduced the lending rate by 0.5 per cent with a view to boosting growth. It has cut the benchmark lending rate by a total of 1.25 per cent since January.
Also read:
RBI cuts repo rate by bigger-than-expected 50 basis points
Arun Jaitley nudges banks to pass on rate cut benefit to borrowers
RBI lowers GDP forecast for FY'16 to 7.4 per cent
Sensex back in green; up 87 points as RBI cuts rate by 0.5 per cent
P Chidambaram welcomes RBI rate cut of 0.5 per cent
Home, auto loans to cost less as RBI cuts rate by 0.50 per cent
Government to review interest rate on small saving schemes: Economic Affairs Secretary
RBI rate cut to drive growth, banks must follow suit: India Inc
Raghuram Rajan for faster transmission of RBI rate cut
As regards the price situation, Jaitley said: "There will be a need to have a constant vigilance now on the inflation front. This decision of the RBI actually implies that inflation pressure has moderated significantly and is now within the comfort zone."
The government, he stressed, was fully committed to meeting the fiscal deficit target in order to consolidate the gains achieved by the contained inflation.
On RBI's decision to relax portfolio investment norms, Jaitley said, it will allow Indian corporates "to raise external commercial borrowings (ECBs) through rupee denominated offshore bonds with no end use restrictions. This would enable them with an additional source of resources."