India Ratings and Research (Ind-Ra) said on Wednesday that an interest rate cut by the Reserve Bank of India (RBI), which is almost certain in the second bi-monthly monetary policy statement for 2019-20, is unlikely to stimulate demand in the near-term due to absence of quick resonance in financial market."Despite the RBI cutting policy rate by 50 basis points so far in 2019, banks have not adjusted their lending and deposit rate accordingly," it said in a statement. "On the contrary, a number of banks have raised their deposit rates to mobilise funds."At the core of this mismatch between the RBI's action and the banks' inability to pass on the benefit to borrowers is the slowdown in household savings, said Ind-Ra.Increased government borrowing and elevated small savings rate have rendered deposit and investment mobilisation by banks and non-banking finance companies expensive.Also, India's consumption demand is still not a pronounced credit-fuelled or leveraged demand. Outstanding ...
