“Banks are paying 8 % for deposits and are deploying them at 7%,” said Dr Chakrabarty  

September 9, 2009

The banks have to reduce their deposit rates for the bond yields to come down. The rise in bond yields was not a concern for the central bank, said Dr K.C. Chakrabarty, deputy governor of the Reserve Bank of India in Mumbai. “Unless banks reduce their deposit rates, I don’t see bond yields coming down,” said Mr Chakrabarty. “The government borrowing programme is proceeding smoothly and yields won’t fall as long as banks resist lowering interest rates they pay on deposits,” said Mr Chakrabarty. He also informed that there is a need of effective implementation of technology products in the banking sector to achieve the goals of financial inclusion.

- Pallabika Ganguly