Benefit of base-point cut in interest-rates be compulsorily passed on to old loan-takers

Kashmir Times. Dated: 8/10/2019 11:16:10 AM

Dear Editor,
It refers to Reserve Bank of India RBI cutting a 35 basic-point cut in interest-rates to lower EMIs of loans. But in practice, such benefits are absorbed by loan-givers banks and Non-Banking-Financial-Companies NBFCs without passing on the benefit to old customers till they approach for lowering of interest-rates. In practice, very few customers approach for cut in interest-rates. Banks and NBFCs very reluctantly lower interest-rates even on being approached. Benefit of cut in basic-point of rates by RBI is used to lure new loan-takers by banks and NBFCs. System should be that banks and NBFCs may have to compulsorily pass on benefits of cut in basic-points of interest-rates to old loan-takers.
Basic problem is that decision-takers at RBI react to public-needs only after decades. It took a full one decade after writing repeatedly to RBI and in newspapers and raising the issue through RTI applications that RBI has now announced total abolition of foreclosure-charges on pre-payment of loans.
It is time that RBI and central government may fix maximum permissible interest-rates by banks and NBFCs including on delayed payment of credit-card dues. Financing of NBFCs by banks should be totally banned so as to avoid unnecessary mid-body on unethical business of money-lending. There are too many banks in private and public-sector which can directly deal in money-lending business without necessitating an additional mid-body in form of NBFCs to earn profit. It will lower interest-rates for loan-takers eliminating profit by NBFCs.
—Subhash Chandra Agrawal,
1775 Kucha Lattushah
Dariba, Chandni Chowk Delhi.



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