Finance Minister Nirmala Sitharaman Image Credit Source: PTI
The Reserve Bank of India has not made any change in the repo rate since February 2023. There has been no interest rate cut since May 2000. The inflation rate has exceeded the RBI’s tolerance level , that is, more than 6 percent. In such a situation, will the RBI reduce the MPC repo rate in the month of December? The answer to this question is quite simple and it is no. On the other hand, the country’s Finance Minister expressed concern about high interest rates during a program.
He said banks should not only think about reducing them, but should also take steps to reduce them. Now the most important question is whether the RBI, the regulator of banks in the country, will take any decision regarding the reduction in interest rates in the month of December. The question is very difficult. Amid rising inflation, this statement by the country’s Finance Minister has become a big challenge for the RBI. Shall we also tell you what he said?
Need to reduce loan rates
Union Finance Minister Nirmala Sitharaman on Monday said bank interest rates are extremely stressful for some people and steps need to be taken to bring them down. Amid widespread concerns about the possibility of a slowdown in economic growth, the Finance Minister assured that the government is fully aware of the domestic and global challenges. He said there is no need to worry unnecessarily. Sitharaman said the important thing is that when you look at India’s growth needs, the view in many quarters is that the cost of borrowing is actually going to be extremely high.
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Banks focus here
At a time when we want industries to grow rapidly and capacity to be created, bank interest rates should be much cheaper. At the State Bank of India’s (SBI) annual business and economics conference, he asked banks to focus on their core job of providing loans. The Finance Minister said mis-selling of insurance products also indirectly increases the cost of borrowing for an individual or institution.
Is there any signal for RBI?
For the country’s Finance Minister to say that banks need to reduce interest rates is not a signal to the RBI. The RBI MPC will be held in the month of December. However, many experts have denied that the RBI will make any changes in interest rates in the month of December. However, in the month of October, the RBI governor changed the RBI’s stance and said that interest rates could be reduced in the coming days. But the inflation figures for the month of October have once again made the RBI think. In October, the retail inflation figure exceeded 6.20 percent.
