The banks have asked the RBI to keep rates steady

By Pradeep Yuvaraj | August 20, 2011

A recent press report said that Indian banks have told the Reserve Bank of India, which has raised rates 13 times since February 2010 to control inflation to change course and keep interest rates steady as they fear asset quality will be further impaired with high interest rates and a slowdown in growth.

Reports said that several bank CEOs made out a strong case for a pause on the rate action front at a meeting with the Governor of the RBI Dr. Subbarao. The bankers told the RBI that another rate increase will not only affect the industry but it will also cause harm to the business of banks.

Reports said that banks are under pressure in boosting their loan growth and also to protect their margins with the level of bad loans on the rise. It also said that loan growth in the current year is close to 2.6 % compared to 3.4 % a year ago. The RBI has projected a loan growth of 19 % for FY 12.

The RBI is the central banking institution of India and it controls the monetary policy of the rupee. The regulator has recently hiked key interest rates by 25 basis points, which is its 12th such hike since March, 2010.

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About Pradeep Yuvaraj

Pradeep Yuvaraj is a Co-Founder and Director at Finerva Financial Solutions Private Limited, a financial education company focused on personal finance education. He has penned over 250 articles relating to Personal Finance and clocked over 500 hours of educating individuals on managing personal finance. He is a serial entrepreneur and has been associated with 7 Start-ups. His entrepreneurial experience spans industries as varied as Education, Gas Engineering, Automobile Design, Software development and more recently a Pure play presentation design company. Prior to turning entrepreneur in 2005, he has worked for 3 of the top ten companies of the world - Shell, ExxonMobil and Total SA. This experience included handling Branch Operations, Channel Sales and Business Development across 5 states over a period of 8 years. He holds an MBA from Symbiosis and an Electronics Engineering Degree from the University of Pune.

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