ISSN (Online) - 2349-8846
-A A +A

Repo Rate and Bank Credit

The Government of India has, on more than one occasion, mounted pressure on the Reserve Bank of India to reduce the rate of interest to encourage investment. The RBI has, however, remained cautious, but has reduced rates gradually since early 2015. At lower rates of interest, the fixed and administrative cost acquires more weight in the banks’ cost of funds which restrict their ability to reduce rates in proportion to the repo rate reduction and the gap between the two tends to widen. Lowering repo rates has not accelerated bank credit.


Subscribers please login to access full text of the article.



Subscribe Now !

Get instant access to the complete EPW archives

New 3-Month Subscription to Digital Archives at just Rs 531 for India and $18 for overseas users.


Updated On : 16th Jan, 2018


(-) Hide

EPW looks forward to your comments. Please note that comments are moderated as per our comments policy. They may take some time to appear. A comment, if suitable, may be selected for publication in the Letters pages of EPW.

Back to Top