A recent report reveals that RBI is concerned for the last increasing of interest rates in the Government bonds. RBI suspects that this latest hike in the interest rates of different Government bond will soon influence the interest rates of long-term deposits on other banks. Since the country is already suffering a problem of low fund in the financial sector and if the rates of other banks will move above 9%, it will create a large problem.
As banks are now holding a lower interest rate within the margin of 9% of interest rate, if the banks will increase interest rate, it will also increase the liquidity in the financial market. This may affect the gross capital of the country and make the country into a capital-starved country in coming days.
Financial experts’ fear that if the rate will fluctuate and touch the rising point, will affect the capital segments of both private as well as public sectors. To solve this easy flow of capital, RBI has planned to bring new ideas for tightening the situation and to bring back the favorable market for the Indian capital market.