'Interest rate hike to make banks self sufficient'
November, 02nd 2006
The Government on Wednesday said hike in repo rate by the Reserve Bank of India is not intended to make loans costlier but to make banks self sufficient for lending.
"Respective boards of the banks have to take a decision on lending rates and the government has no role in it," Minister of State for Finance P K Bansal said, responding to a query on whether loans would become costlier after the revised repo rate.
Bansal said the 0.25 per cent increase in repo rate is aimed at containing inflation, while hinting that banks would have to depend on their own resources for liquidity.
The central bank had yesterday increased repo rate - the rate at which banks borrow from RBI - to 7.25 per cent from the earlier 7 per cent.