NEWS & ADVICE : HOME LOANS
Rise deposits rates, sink lending rates: suggests RBI
By Neelima Shankar
Nov 16, 2011
Print    Email    RSS   

Banking and monetary regulator Reserve Bank of India has advised banks to increase deposit rates in a bid to enhance the savings growth rate in the country even if it means pulling down the net interest margins (NIM) of banks.

"The NIM of the Indian banking system is higher than that in some of the other emerging markets, even after accounting for mandated social sector obligations such as priority sector lending and credit support for the government's anti-poverty initiatives," read a release by the apex bank recently on the Trend & Progress of Banking sector in India.

"While a higher NIM contributes to profitability, it also implies a higher cost of financial intermediation in the economy, which is considered a sign of inefficiency," said RBI.

Along with this the apex bank has advised that banks should aim at lowering lending rates so as to provoke more investment.

"The upward revision in the savings bank deposit rate from 3.5 per cent to four per cent and deregulation of the interest rate on savings bank accounts may improve savings deposit mobilisation going forward. However, in a competitive environment, with the deregulation of interest rates, savings deposits will be no longer be less expensive as they were in the past," the RBI said.


 


(Comments Posted : 0) Post Your Comments
Show All Comments
COMPARE QUICKLY
 Select a product:
 

CALCULATE QUICKLY
 Select a product:
 

EDITORS' PICKS
Carnival of Indian Personal Finance Blogs #3
Joint Home Loan: A wise decision for a...
A chronicle of excesses by loan recovery...
Refinancing your home loan: is it a...
An insight into the era of teaser loans


i like to know the balance amount of lic mortgage...
how can applay for DSA. any age, qalification,...
How to view my home loan account statement
how to get status of home loan

NEWS THIS WEEK
Canara Bank earned a profit of 60%. Feb 6, 2015
New Branch of Laxmi Vilas bank at Vijayawada Jan 30, 2015
Home loan EMIs expected to drop down Jan 21, 2015
Corporation Bank received MSME banking excellence award 2014 Jan 19, 2015
Home loan rates set to fall, after reduction in repo rate Jan 16, 2015
News Archive