As per the report appearing in The Economic Times, Assocham has demanded the Government to direct the commercial banks to reduce their lending rates by at least 2% to boost the credit off-take, which was at 9% for the period from April to October 2009. The increase in deposits during the same period was 22%.
Source: http://economictimes.indiatimes.com/news/news-by-industry/banking/finance-/banking/Banks-should-cut-lending-rates-by-2-pc-Assocham/articleshow/5237133.cms
BANKS SHOULD CUT LENDING RATES BY 2% - ASSOCHAM
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Industry chambers are crying for reduction in lending rates. Whether they ever thought about the source of deposits in the bank.
It is the hard earned money and comes from house hold savings. Poor depositors are paid interest ranging between 7.5% to 8.5%, as against the inflation of 10 to 11%CPI(consumer price index)based inflation stands above 10%continuously for more than a year. So what is the real rate of return on deposit is negative. Unfortunately both RBI and Govt talks inflation based on wholesale Price Index (WPI) coolly forgetting CPI and trumpeting inflation is negative, now 1.4%.
Thus the industry wants to enjoy cheaper credit at the cost of poor and middle class. M.S.Sundaram
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