RBI should cut rates by 75 bps: Assocham

Industry body Assocham has said that Reserve Bank of India should cut interest rate by 0(point)5-0(point)75 per cent in view of dismal credit growth as well as subdued demand.

As the RBI Monetary Policy Committee meets on February 7-8 for next bi-monthly credit policy, Assocham has impressed upon the central bank and the Finance Ministry to ensure adequate transmission of cuts in the interest rates.

In a press release, Assocham said, the industry is expecting at least 50-75 basis points



reduction in the policy interest rates and the banks should pass on the entire benefit to the borrowers.It added that, the demonetisation has resulted in windfall gains for the banks in the form of ultra low cost funds from the current account/saving account (CASA). 

Assocham President Sunil Kanoria said, being majority owner of the banks and as a regulator, both the government and the RBI have roles in advising banks to pass on the commensurate reduction in the interest rates.