RBI Policy with Anil Singhvi: Pratip Chaudhari says big relief for senior citizens, bank liquidity

RBI Policy with Anil Singhvi: The Reserve Bank of India (RBI) has announced its credit policy leaving the key Repo Rate unchanged at 4 pct in a surprise move. Reacting to the announcement by RBI Governor Shaktikanta Das, former Chairman of State Bank of India (SBI), Pratip Chaudhari said that RBI has provided big relief to the senior citizens and the banks on the liquidity front.

Speaking on how leaving Repo Rate unchanged is going to help senior citizens, Pratip Chaudhari said, "RBI has left Repo Rate unchanged and that means banks don't need to further decrease the deposit rates they offer to account holders. It's well known that senior citizens depend heavily on their bank deposit interest rates to meet their financial requirements post-retirement. Hence, by leaving Repo Rate unchanged, the Central Bank of India has indirectly provided a big relief to the senior citizens."

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Pratip Chaudhari said that this status quo will help banks to negate any chances of liquidity crisis also because because in the case of Repo Rate cut, banks would have been forced to cut deposit interest rates and that could have potentially dented bank deposits - probably, withdrawals would have happened from existing bank deposits. This would have, in turn, led to liquidity problems for banks as they use these deposits for their banking needs.

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राहत की बात है कि रेपो रेट में बदलाव नहीं किया गया, क्योंकि रेपो रेट को और कम करने से डिपॉजिट रेट कम हो जाती जिससे बैंकों को लिक्विडिटी प्रॉब्लम होती : प्रतीप चौधरी, पूर्व चेयरमैन, SBI #RBI #RBIPolicy #CreditPolicy @AnilSinghvi_ pic.twitter.com/ce7d9nhHCO

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RBI Repo rate has an importance in the Indian banking system as Indian Banks have now implemented repo linked interest rates. So, if the Repo Rate is decreased, then banks will have to decrease their deposit rates while in the case of an increase in Repo Rate, bank look to increase the deposit interest rates.