Reserve Bank of India cut the repo rate by 0.25 percent on January 15 and further by 0.25 percent on March 4. Out of 91 scheduled commercial banks in the country, a total of 21 banks have lowered their base rates after RBI's rate cut decisions, Minister of State for Finance Jayant Sinha said on Tuesday.

These include four public sector banks, six from the private sector and 11 foreign banks. The reduction in base rates has been in the range of 0.1-0.5 percent so far. This leaves as many as 70 banks that have not lowered their rates, despite RBI easing its monetary stance twice.
    
"Following the reduction in the policy rate, out of 91 scheduled commercial banks, 21 banks reduced their base rates in the range of 0.1-0.5 percent so far (up to April 15)" Sinha said in written reply to a Rajya Sabha question.

Accordingly, he said, the weighted average lending rates on fresh rupee loans sanctioned by banks for housing and vehicle loans have also come down in the range of 8.53 basis points during the same period.

There are 27 public sector banks, 20 private sector and 44 foreign banks with scheduled commercial bank license in the country. The PSU banks have 70 per cent market share.
     
In RBI's last monetary policy meeting earlier this month, Governor Raghuram Rajan was very critical of banks for not passing on the rate cut benefits to the borrowers.
     
A recent study paper from the International Monetary Fund (IMF) also pointed out that banks in India resist passing on RBI's rate cuts to consumers, although they are rather quicker in responding to rate hikes by the central bank.

It takes 13 months on an average for pass-through from a change in the RBI's policy rate to the interbank rate. Thereafter, it takes over nine months for change in deposit rates for customers and a much longer period of nearly 19 months in case of lending rates, the study found.

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