Qus: Given the current market situation, what is your view on the lending rates?
Ans: The lending rates have been softening over past few months. However, there are many dynamics which are yet to be unraveled. Statistical inflation may show negative figures but Consumer Price Index still hovers around 12%. The fiscal deficit is very high and there is ample liquidity in the system. Crude prices are again on a rise. All these factors denote return of inflation in the system. However, regime of lower interest rate may not prevail for a longer period. Given this, the Bank, welcomes proposed move of the RBI to standardize the manner of arriving at PLR and extent of sub PLR lending. This will bring the transparency in the system.
