RBI's idea on interest rates receives mixed response
By Neelima Shankar
Dec 7, 2010
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Reserve Bank of India had advised banks on increasing interest rates on deposits while decreasing the same for loans in order to bring down their net interest margins (NIM). The idea has led to many banks raising their fixed deposit rates but at the same time reluctance in dipping lending rates.

Lending rates, on the contrary are seeing a rise for banks like the largest private sector lender, ICICI Bank. ICICI Bank has revised both deposit and loan rates. Lending rates were also raised by HDFC Home Finance earlier.

"To achieve our collective aspiration of double-digit and inclusive growth, we need to raise the level of national savings and channel those savings into investment... This means banks need to raise the interest rates offered to depositors and reduce the lending rates charged on borrowers," Subbarao had said at the annual Bancon 2010 banking conference in Mumbai.

Deposit rates have seen striking rise by the largest lender of the country, State Bank of India.


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