The Reserve Bank of India (RBI) governor Shaktikanta Das, on February 18, 2019, reiterated the need for banks to cut interest rates, saying that ‘transmission of monetary policy decisions is important’. “Transmission of rates is very important, especially after the central bank announces a rate cut. It is already stated in our post-MPC (Monetary Policy Committee) conference. I am having an interaction with CEOs and MDs of banks, both public and private sector, on February 21, 2019” Das said. On February 7, 2019, the RBI cut the benchmark interest rate by 0.25 per cent to 6.25 per cent. However, only a handful of banks, including SBI, have reduced their rates, that too by just 0.05 per cent.
On the MSME restructuring scheme, Das said the RBI recently announced a package, for units having outstanding loans of up to Rs 25 crores. “All those cases are covered under the restructuring scheme. So, now, the ball lies in the court of the banks to restructure loans of eligible MSMEs,” he said.
Asked about regulatory action against some private sector lenders, the governor said the Kotak Mahindra Bank case, regarding dilution of promoter stake, is pending in court. “So, it would not be correct on my part to comment on that matter, because it is sub-judice. With regard to Yes Bank, it is the issue between the regulator and regulated entity. Having said that, I would like to also say that the effort of the RBI is to constructively engage with all the regulated entities, including the banks, to ensure the compliance of various regulatory requirements,” he said.
Last week, the RBI warned Yes Bank of regulatory action for disclosure of nil divergence report, in violation of norms. Yes Bank, in a press release earlier last week, had said the RBI had not found any divergence in the asset classification and provisioning done by the lender during 2017-18. In a regulatory filing on February 15, 2019, Yes Bank said it had received a letter from the RBI, which noted that the Risk Assessment Report (RAR) was marked ‘confidential’ and it was expected that no part of the report be divulged, except for the information in the form and manner of disclosure prescribed by regulations.
On credit offtake, Das said some growth was visible. “The aggregate flow of finance and credit to commercial sector has shown some improvement but it is not broad based. It is not flowing in various sectors the way it should be,” he said.