RBIThe banks have been given a warning by the RBI saying that if they are not correctly abiding the base rate reductions, they will face a problem in the forthcoming supervisory cycle by RBI, which will be held soon. They will also have to prepare the internal ombudsman scheme.

The banks have not shown any transparency in the process of delivering rate cuts to borrowers and neither have they shifted the loans to MCLR (Marginal Cost of Lending Rate).

One of the banks had decreased its MCLR by basis points of 105; while on the other hand, its base rate cuts for borrowers was decreased by only 10 basis points.  All this while, 70% of customers were maintained in the base rate regime. If one bank is doing so, other banks are not likely to be left behind.

Even after one year of the internal ombudsman scheme being proposed, numerous banks (categorically the public sector banks) have still not executed the scheme.

As a result, this default will be taken seriously in the forthcoming supervisory cycle by RBI and proper action will be taken against it.

The biggest matter of concern is that the banks are not providing any aid to the MSMEs (micro, small and medium enterprises) when they are facing difficult times.

Many MSMEs are facing issues because of this behavior by banks.

Effect of Rate Cut for Homebuyers
Housing sector alone contributes to 5-6% of Indian Economy. As per current scenario, post notebandi, quite a less investment is observed in real estate firms. Hence, housing projects and other realty projects are being delayed.

Rate cut in home loan will be a relief to the realty sector for it will pull interest of homebuyers to invest more in housing firms through loans at low rate.