With the festive season around the bend, the idea to lower rates on funds for banks in order to reduce the interest on car and home loans may be a sweeping welcome initiative from the RBI. This idea is based on a strategy and operational procedure that the bank of England has adopted recently to provide low rate funds for its banks and housing corporations and increase the potential of loans.
While considering the close link between the price and quantity of the lending performance of our banks so far, this move is supposed to boost the lending ability of the banks. While the general public may be a bit slow on the uptake for this initiative, the immediate results are expected from the banks. Once again, the finance ministry quotes the success of a similar plan launched in the year 2012 by Bank of England as the base reason for this initiative.