Senior bankers are trying to impress upon the central bank that the shift to external benchmark-linked lending be postponed to April 1, 2020.
Currently, banks follow system of internal benchmarks, including Prime Lending Rate, Benchmark Prime Lending Rate, Base rate and Marginal Cost of Funds based Lending Rate.
'If the new rate is lower than your current rate, ask your bank to shift you to it.' 'This can be done by paying a fee of Rs 5,000 to Rs 6,000.'
RBI Governor Raghuram Rajan asked banks to follow suit and pass on the rate cuts.
Banks seems to be upset over RBI's move over rate cut.
The move will to a large extent speed up the monetary transmission process--which is banks passing on the rate cuts that the Reserve Bank announces to their borrowers without much delays--something that has been missing all these while and something that the RBI has been unhappy with.
For banks to cut loan rates, the cost of deposits needs to come down, and there is no sign of that happening.
SBI announced a 0.40 per cent cut in lending rate to 9.30 per cent, which is the most competitive in the market at present.
The interest rate on FDs hasn't changed much over the years.
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