The government will lean on state-run banks that are reluctant to pass on the full effect of measures taken by Reserve Bank of India (RBI) in the form of rate cuts that are badly needed to shore up growth.
After RBI lowered the policy rate by 25 basis points and took a range of measures to enhance liquidity, the government feels banks have little excuse not to pass on benefits to consumers. One basis point is 0.01 percentage point.
"We would want the banks to reduce rates latest by May 1. We will exert pressure on banks to do so," a top government official told ET.
Some banks had cut rates marginally after the new marginal cost of funds based lending rate (MCLR) regime was rolled out at the start of the month, but the government feels there is room for much more."The banks will perhaps need to do some more of transmission of the reduction in policy rates by RBI," economic affairs secretary Shaktikanta Das had said after RBI cut the repo rate on Tuesday.