Lok Sabha Question No. 1091 (UNSTARRED), answered on 2016-04-29
Subject: Interest Rate Cut by RBI
Ministry: FINANCE
Asked by: RAKESH SINGH, PONNUSAMY VENUGOPAL

## GOVERNMENT OF INDIA MINISTRY OF FINANCE DEPARTMENT OF FINANCIAL SERVICES

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## LOK SABHA UNSTARRED QUESTION NO. 1091 TO BE ANSWERED ON FRIDAY, APRIL 29, 2016/VAISAKHA 9, 1938 (SAKA) 'Interest Rate Cut by RBI' QUESTION

## †1091. SHRI RAKESH SINGH: DR. P. VENUGOPAL:

Will the Minister of FINANCE be pleased to state:

- (a) the  details  of  cut  in  the  interest  rates  made  by  RBI  during  the  last  three years and the current year;
- (b) whether nationalised banks are not forwarding the benefit of cut in interest rates by RBI to its customers;
- (c) if so, the reasons therefor; and

(d) whether the Government has directed banks to reduce interest rates to give impetus to consumer demand and economic progress?

## ANSWER

## The Minister of State in the Ministry of Finance (SHRI JAYANT SINHA)

(a) The Reserve Bank of India (RBI) has cumulatively cut the policy repo rate by 150 basis points (bps) since January, 2015. The details of movement in key policy rates  of  RBI  during  the  last  three  years  and  the  current  year  are  given  at Annexure-I.

(b) to  (d)  With  the  introduction  of  Base  Rate  System  from  1 st   July,  2010,  and thereafter Marginal Cost of Funds based Lending Rate (MCLR) System with effect from   1 st  April, 2016, all rupee lending rates (including advances up to Rs.2 lakh) have  been  deregulated  and  these  interest  rates  are  determined  by  banks themselves as approved by their respective Boards. In a deregulated environment, interest  rates  on  all  types  of  advances  (fixed  and  floating  interest  rates)  are decided by banks based on their commercial judgment.

The Public Sector Banks (PSBs) have reduced their base rates in the range of 3070 basis points up to April 15, 2016 compared to January 15, 2015 (Annexure-II )

Introduction of MCLR with effect from 1st April, 2016 has led to further reduction in lending rates compared to Base Rate System as shown in Annexure-III.

Movement in Key Policy Rates of RBI

## Annexure-I

(Per cent)

| Effective since   |   Repo Rate | Repo Rate   |   Reverse Repo Rate | Reverse Repo Rate   |   Marginal Standing Facility | Marginal Standing Facility   | Bank Rate   | Bank Rate   |   Cash Reserve Ratio | Cash Reserve Ratio   |   Statutory Liquidity Ratio | Statutory Liquidity Ratio   |
|-------------------|-------------|-------------|---------------------|---------------------|------------------------------|------------------------------|-------------|-------------|----------------------|----------------------|-----------------------------|-----------------------------|
| 17-Apr-12         |        8    | (-0.50)     |                7    | (-0.50)             |                         9    | (-0.50)                      | 9.00        | (-0.50)     |                 4.75 |                      |                       24    |                             |
| 11-Aug-12         |        8    |             |                7    |                     |                         9    |                              | 9.00        |             |                 4.75 |                      |                       23    | (-1.00)                     |
| 22-Sep-12         |        8    |             |                7    |                     |                         9    |                              | 9.00        |             |                 4.5  | (-0.25)              |                       23    |                             |
| 03-Nov-12         |        8    |             |                7    |                     |                         9    |                              | 9.00        |             |                 4.25 | (-0.25)              |                       23    |                             |
| 29-Jan-13         |        7.75 | (-0.25)     |                6.75 | (-0.25)             |                         8.75 | (-0.25)                      | 8.75        | (-0.25)     |                 4.25 |                      |                       23    |                             |
| 09-Feb-13         |        7.75 |             |                6.75 |                     |                         8.75 |                              | 8.75        |             |                 4    | (-0.25)              |                       23    |                             |
| 19-Mar-13         |        7.5  | (-0.25)     |                6.5  | (-0.25)             |                         8.5  | (-0.25)                      | 8.50        | (-0.25)     |                 4    |                      |                       23    |                             |
| 03-May-13         |        7.25 | (-0.25)     |                6.25 | (-0.25)             |                         8.25 | (-0.25)                      | 8.25        | (-0.25)     |                 4    |                      |                       23    |                             |
| 15-July-13        |        7.25 |             |                6.25 |                     |                        10.25 | (+2.00)                      | 10.2 5      | (+2.00)     |                 4    |                      |                       23    |                             |
| 20-Sep-13         |        7.5  | (+0.25)     |                6.5  | (+0.25)             |                         9.5  | (-0.75)                      | 9.50        | (-0.75)     |                 4    |                      |                       23    |                             |
| 07-Oct-13         |        7.5  |             |                6.5  |                     |                         9    | (-0.50)                      | 9.00        | (-0.50)     |                 4    |                      |                       23    |                             |
| 29-Oct-13         |        7.75 | (+0.25)     |                6.75 | (+0.25)             |                         8.75 | (-0.25)                      | 8.75        | (-0.25)     |                 4    |                      |                       23    |                             |
| 28-Jan-14         |        8    | (+0.25)     |                7    | (+0.25)             |                         9    | (+0.25)                      | 9.00        | (+0.25)     |                 4    |                      |                       23    |                             |
| 14-Jun-14         |        8    |             |                7    |                     |                         9    |                              | 9.00        |             |                 4    |                      |                       22.5  | (-0.50)                     |
| 09-Aug-14         |        8    |             |                7    |                     |                         9    |                              | 9.00        |             |                 4    |                      |                       22    | (-0.50)                     |
| 15-Jan-15         |        7.75 | (-0.25)     |                6.75 | (-0.25)             |                         8.75 | (-0.25)                      | 8.75        | (-0.25)     |                 4    |                      |                       22    |                             |
| 07-Feb-15         |        7.75 |             |                6.75 |                     |                         8.75 |                              | 8.75        |             |                 4    |                      |                       21.5  | (-0.50)                     |
| 04-Mar-15         |        7.5  | (-0.25)     |                6.5  | (-0.25)             |                         8.5  | (-0.25)                      | 8.50        | (-0.25)     |                 4    |                      |                       21.5  |                             |
| 02-Jun-15         |        7.25 | (-0.25)     |                6.25 | (-0.25)             |                         8.25 | (-0.25)                      | 8.25        | (-0.25)     |                 4    |                      |                       21.5  |                             |
| 29-Sep-15         |        6.75 | (-0.50)     |                5.75 | (-0.50)             |                         7.75 | (-0.50)                      | 7.75        | (-0.50)     |                 4    |                      |                       21.5  |                             |
| 02-Apr-16         |        6.75 |             |                5.75 |                     |                         7.75 |                              | 7.75        |             |                 4    |                      |                       21.25 | (-0.25)                     |
| 05-Apr-16         |        6.5  | (-0.25)     |                6    | (+0.25)             |                         7    | (-0.75)                      | 7.00        | (-0.75)     |                 4    |                      |                       21.25 |                             |

## Source: RBI

Base  Rates - Public Sector Banks

| Sr. No.   | Bank                             |   Jan 15, 2015 |   April 15, 2016 |   Variation (Percentage Points) |
|-----------|----------------------------------|----------------|------------------|---------------------------------|
| 1         | Allahabad Bank                   |          10.25 |             9.7  |                           -0.55 |
| 2         | Andhra Bank                      |          10.25 |             9.75 |                           -0.5  |
| 3         | Bank of Baroda                   |          10.25 |             9.65 |                           -0.6  |
| 4         | Bank of India                    |          10.2  |             9.7  |                           -0.5  |
| 5         | Bank of Maharashtra              |          10.25 |             9.7  |                           -0.55 |
| 6         | Bhartiya Mahila Bank             |          10.25 |             9.7  |                           -0.55 |
| 7         | Canara Bank                      |          10.2  |             9.65 |                           -0.55 |
| 8         | Central Bank of India            |          10.25 |             9.7  |                           -0.55 |
| 9         | Corporation Bank                 |          10.25 |             9.65 |                           -0.6  |
| 10        | Dena Bank                        |          10.25 |             9.7  |                           -0.55 |
| 11        | IDBI Bank Ltd.                   |          10.25 |             9.75 |                           -0.5  |
| 12        | Indian Bank                      |          10.25 |             9.65 |                           -0.6  |
| 13        | Indian Overseas Bank             |          10.25 |             9.9  |                           -0.35 |
| 14        | Oriental Bank of Commerce        |          10.25 |             9.7  |                           -0.55 |
| 15        | Punjab and Sind Bank             |          10.25 |             9.75 |                           -0.5  |
| 16        | Punjab National Bank             |          10.25 |             9.6  |                           -0.65 |
| 17        | State Bank of Bikaner and Jaipur |          10.25 |             9.7  |                           -0.55 |
| 18        | State Bank of Hyderabad          |          10.2  |             9.75 |                           -0.45 |
| 19        | State Bank of India              |          10    |             9.3  |                           -0.7  |
| 20        | State Bank of Mysore             |          10.25 |             9.65 |                           -0.6  |
| 21        | State Bank of Patiala            |          10.25 |             9.65 |                           -0.6  |
| 22        | State Bank of Travancore         |          10.25 |             9.95 |                           -0.3  |
| 23        | Syndicate Bank                   |          10.25 |             9.7  |                           -0.55 |
| 24        | UCO Bank                         |          10.2  |             9.7  |                           -0.5  |
| 25        | Union Bank of India              |          10.25 |             9.65 |                           -0.6  |
| 26        | United Bank of India             |          10.25 |             9.65 |                           -0.6  |
| 27        | Vijaya Bank                      |          10.25 |             9.65 |                           -0.6  |
| Minimum   | Minimum                          |          10    |             9.3  |                           -0.3  |
| Maximum   | Maximum                          |          10.25 |             9.95 |                           -0.7  |

Source: RBI

Annexure-II

(Per cent)

Statement referred to in respect of part (b) to (d) of Lok Sabha Unstarred Question No. 1091 for 29.4.2016 raised by Shri Rakesh Singh and Dr P. Venugopal  regarding 'Interest rate cut by RBI' Annexure-III

Comparison  of  Base  Rate  and  Marginal  Cost  of  Funds  Based  Lending  Rate (MCLR) as on April 15, 2016 of Public Sector Banks

(Per cent)

| Sr. No.   | Bank                     |   BASE RATE as on April 15, 2016 |   MCLR as on April 15, 2016 |
|-----------|--------------------------|----------------------------------|-----------------------------|
| 1         | Allahabad Bank           |                             9.7  |                        9.4  |
| 2         | Andhra Bank              |                             9.75 |                        9.45 |
| 3         | Bank of Baroda           |                             9.65 |                        9.05 |
| 4         | Bank of India            |                             9.7  |                        9.25 |
| 5         | Bank of Maharashtra      |                             9.7  |                        9.45 |
| 6         | Bhartiya Mahila Bank     |                             9.7  |                        9.55 |
| 7         | Canara Bank              |                             9.65 |                        9.35 |
| 8         | Central Bank of India    |                             9.7  |                        9.5  |
| 9         | Corporation Bank         |                             9.65 |                        9.53 |
| 10        | Dena Bank                |                             9.7  |                        9.45 |
| 11        | IDBI Ltd                 |                             9.75 |                        9.4  |
| 12        | Indian Bank              |                             9.65 |                        9.4  |
| 13        | Indian Overseas Bank     |                             9.9  |                        9.65 |
| 14        | Oriental Bk. of Commerce |                             9.7  |                        9.45 |
| 15        | Punjab & Sind Bank       |                             9.75 |                        9.65 |
| 16        | Punjab National Bank     |                             9.6  |                        9.33 |
| 17        | State Bank of India      |                             9.7  |                        9.15 |
| 18        | State Bank of Hyderabad  |                             9.75 |                        9.5  |
| 19        | State Bank of B & J      |                             9.3  |                        9.5  |
| 20        | State Bank of Mysore     |                             9.65 |                        9.3  |
| 21        | State Bank of Patiala    |                             9.65 |                        9.6  |
| 22        | State Bk. of Travancore  |                             9.95 |                        9.75 |
| 23        | Syndicate Bank           |                             9.7  |                        9.65 |
| 24        | UCO Bank                 |                             9.7  |                        9.48 |
| 25        | Union Bank of India      |                             9.65 |                        9.45 |
| 26        | United Bank of India     |                             9.65 |                        9.35 |
| 27        | Vijaya Bank              |                             9.65 |                        9.4  |
| Minimum   | Minimum                  |                             9.3  |                        9.05 |
| Maximum   | Maximum                  |                             9.95 |                        9.75 |

Source: RBI