United Bank of India

United Bank of India S B DUTT, Chairman of the United Bank of India feels that the Bank rate should be reduced substantially for the general revival of the Indian economy. He has stated at the annual general meeting of the Bank that the higher interest rate structure has not in any way increased the flow of capital in the economy. If anything, it has resulted in the drying up of the flow of capital, as witnessed by the state of the capital market all through this period of high interest rates. The high level of Bank rate obliges the Government to borrow at a higher rate, which obviously imposes an increased burden on the revenue resources of the Government in the form of higher debt-servicing charges. Such an increased burden on the budget leads to an intensification of the fiscal imposition on the economy, which in turn leads to further distortions, Dutt is not convinced by the argument that a developing country like India needs a high Bank rate to attract foreign capital. He says that it is doubtful whether the high Bank rate favourably influences the current actual yield on investment and brightens the prospects of capital gains

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