According to the Japanese financial services major, lower small savings rates, along with marginal cost-based pricing of loans from April this year should facilitate an improvement in monetary policy transmission from April-June period onwards.
"Overall, the move to deregulate small savings rates should be a win-win for both the government and the banks. It will give banks greater flexibility to lower deposit (and lending) rates in sync with falling inflation, while lowering the interest burden for the government at the margin," Nomura said in a research note.
On Friday, the government had cut interest rates on all small savings schemes, including PPF, Kisan Vikas Patra (KVP) and senior citizen deposits, to make them more market aligned.

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