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Expect Bigger Cut in Your House EMI

At review meet, Jaitley asks why banks had effected only 25 bp reduction, though the RBI had trimmed interest rate by 75 bp

Published: 13th June 2015 06:00 AM  |   Last Updated: 13th June 2015 07:24 AM   |  A+A-

NEW DELHI: The equated monthly instalment you pay for your home, auto and other loans are likely to come down further with Finance Minister Arun Jaitley on Friday saying that banks have  assured that they would effect bigger cuts in interest rates in the coming days.

“Some part of it (rate cut) have been passed on to the  customers, while some banks have not passed it on. Some of the bankers felt that over the next few weeks, they would be in a position to work out greater cuts,” said Jaitley.

He, however, added that some banks also expressed their inability to pass on the rate cuts to customers citing problems with their respective balance sheets and higher rates on small savings schemes.

At the performance review meeting of banks, the finance minister questioned the chief executive officers of both public and private sector banks on why the banking system, in response to RBI’s rate cut of 75 basis points since January 2015, effected a corresponding rate cut of only 25 basis points.

Pointing out that the non-performing assets ratio of state-owned banks had improved during the quarter ended March, Jaitley said just one quarter doesn’t indicate a pattern. “The banks themselves are of the assessment that it may take them two to three quarters to reach a somewhat greater comfort level,” he said. In the quarter ended March 31, NPAs of banks declined to 5.2 per cent from 5.6 per cent in the previous quarter.

Jaitley said public sector banks with high stress levels have been asked to state the reason for the situation. “Banks themselves are going to make the effort to reduce their NPAs. We did ask each of the banks, which have a higher NPA level, to explain the reasons,” he said. The government will closely monitor the NPA situation over the next few months. “The banks put up a strong case for additional capital being inducted. Over the next few months, the government will seriously look into it,” said Jaitley.

On demands of PSU banks for greater capital infusion, Jaitley said there is ‘merit’ in their case and the government will seriously consider it.



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