Heads of public and private sector banks told Reserve Bank of India (RBI) governor Shaktikanta Das that it will be difficult to pass on the benefits of the repo rate cut to borrowers immediately, it will take time.
“We gave our side of the story and said since we are heavily dependent on deposits to fund the loans we give out, a change in repo rate will not immediately affect the lending rate,” the first banker said, requesting anonymity. He added that the issue of external benchmark-linked lending rate was not discussed in detail and could be done at a later stage.
The second banker, also requesting anonymity, said that RBI had not set a deadline to reduce rates, and the meeting was more about understanding why the banks could not lower the rates within a specified period. All bank chiefs told the RBI governor that they will discuss this issue at their next meeting when the marginal cost of funds-based lending rate (MCLR) will be determined.