Reserve Bank Deputy Governor HR Khan on Thursday expressed hope that banks would pass on the entire benefit of the cut in the key interest rate. “Different banks are looking at different ways. I think (monetary) transmission will happen and it will happen over time,” he said on the sidelines of National Financial Inclusion Conference. RBI slashed its benchmark short-term lending (repo) rate by 0.50 per cent in its fourth bi-monthly monetary policy review last week but banks have not passed on the entire rate cut benefit to customers.
Most of the banks have cut their benchmark lending rate by 0.25 per cent. Following rate easing by RBI, only SBI reduced its benchmark lending rate by 0.40 per cent. Asked about review of interest rate on small savings, he said, “The secretary, Economic Affairs, and others have mentioned that they are looking at reset period. There was a suggestion to link the rate to G-sec of comparable period.’ Government is looking at that and they will probably do”, he said.