New Delhi: The Reserve Bank still has room to cut the key policy rate in the current fiscal, veteran banker Naina Lal Kidwai has said, while stressing that banks should pass on the benefits of lower rates to customers.
RBI reduced the repo rate by 0.25 per cent to 6 per cent earlier this month, citing reduction in inflation risk. The rate cut was the first in 10 months and brought policy rates to near 7-year low.
"There is clearly room for further rate cuts. But the rate cut from RBI is not good enough. The rate cut has to happen from the way banks engage with industry, and that is a function on how efficient the banks are, what are their NPAs, their losses," Kidwai told PTI on the sidelines of a conference here.
She further said the resolution of non-performing assets (NPAs) or bad loans, going forward, will be a "big positive". "Now moving forward with the Insolvency and Bankruptcy Code, with industries' own performance improving, there should be better resolution of the NPAs and they (banks) should be able to get the NPAs off their books," said Kidwai, who has served as the Country Head of HSBC India, was also president of industry body Ficci.
She said she expects NPAs in the banking sector to come down slowly.
The country's banking sector is saddled with NPAs worth over Rs 8 lakh crore, of which Rs 6 lakh crore alone are with public sector banks.