Accommodating policy definition
In the overall banking industry, I don’t think there will be a big drop or a big change for either deposits or lending rates.
We have already seen lending rates come down quite sharply.Deposit rate are very bank specific and are dependent on the liability structure.SURESH SADAGOPANThe monetary policy anticipates a lower growth of 6.9% this financial year (FY) and 7.4% in FY2017-18.I see stability in lending and deposit rates for some time now.I think we have seen a significant amount of rate cut from the banks already, on the lending side.The transmission of rates to the borrowers has already happened.
Given the current stance, it is unlikely to go down further from here.
SHANTI EKAMBARAMTwo changes that we have seen in February’s monetary policy are the shifts in stance from accommodative to neutral and the move to looking just at the CPI (consumer price index) to look at core inflation. If you remember 2 years ago, it was closer to 9% and now it is closer to 7%.
In fact, many banks are offering marginally below 7% for 1-year fixed deposits.
The Reserve Bank of India (RBI) kept the policy rates unchanged in its latest monetary policy review.
However, RBI governor Urjit Patel said that there is still scope for the lending rates to come down because the policy rate has come down by 175 basis points (bps), while the weighted average lending rates have come down by 85-90 bps only.
Over a 24-month period, we have seen a 200 basis point drop in deposit rates. In the Union Budget, the government has put in a special rate for senior citizen at 8%, up to a certain amount.