RBI Governor To Meet Banks On Transmission Of Policy Rates

Reserve Bank of India Governor Shaktikanta Das said he will meet public and private sector banks on Thursday to discuss the transmission of interest rate cut to borrowers, crucial for achieving the inflation target.

“Transmission of rates is very important, especially after the central bank announces a rate cut,” Das told reporters after the central bank’s customary board meeting post presentation of the Union budget.

Earlier this month, the RBI cut its benchmark repo rate by 25 basis points to 6.25 percent.

In November 2017, RBI Deputy Governor Viral Acharya had said the pass-through from policy rate changes to bank lending rates has been slow and muted. “This lack of adequate monetary transmission remains a key policy concern for the Reserve Bank as it blunts the impact of its policy changes on economic activity and inflation.”

Monetary policy actions are felt with a lag of two to three quarters on output, and with a lag of three to four quarters on inflation, leading to the impact persisting for eight to 12 quarters, Acharya had said.

NPA Divergence Of Yes Bank

Days after the RBI reprimanded Yes bank Ltd. for selective disclosure of a confidential report on divergences in non-performing assets, Das said “the issue is between the regulator and the regulated entity”.

“It’s an effort of the RBI to constructively engage with all the regulated entities, including the banks to ensure the compliance of various regulatory requirements,” he said.

Yes Bank had said the central bank found no divergence in its reporting of bad loan and provisioning numbers for financial year 2017-18. The RBI, in a first-of-its-kind rebuke, told the private lender that the risk assessment report was intended to a be a “confidential” document and that disclosures made by the lender was viewed by the regulator as a “deliberate attempt to mislead.”