Days after rate cut, RBI guv prods bank CEOs to lower costs

Reserve Bank of India (RBI) Governor Sanjay Malhotra on Tuesday asked chief executive officers of publicand private-sector banks to lower intermediation costs and bolster operational efficiencies, citing the 125 basis points (bps) policy rate reduction since February.

- MANOJIT SAHA

The governor conveyed this in an interaction with bank chiefs, four days after the central bank’s Monetary Policy Committee (MPC) cut the benchmark repo rate by 25 bps to 5.25 per cent, the lowest in three years. One basis point equals 0.01 percentage point.

“He (Malhotra) noted that the 125 basis point easing, combined with greater use of technology, should translate into lower intermediation costs and higher efficiency, thereby supporting sustainable growth and deeper financial inclusion,” the RBI said in a statement post the meeting.