ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846
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Differential Rates of Interest - A Comment

September 9, 1972 Differential Rates of Interest A Comment C H Hanumantha Rao IN his article "On Differential Rates of Interest" (July 1, p 1279) A K Dasgnoti observes that although banks should charge differential rates of interest with a view to discriminating in favour of the weaker customers, they should operate on commercial lines and seek to maximise profits subject to some subsidy to the weaker sections. According to him, such an operation on commercial lines is possible because banks have a monopolistic position in the credit market and the system of differential interest rates amounts to monopoly price discrimination, if only re-lending by the weaker sections can be discouraged, as the elasticity of demand for credit of the poorer sections such as small farmers is higher than that of the richer sections.

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