Rajan Hails Money Markets Passing on Rate Cuts as Banks Go Slow
- One-year commercial paper rates sink to five-year low
- Loans in India growing near the slowest pace since 1994
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Sliding money-market rates have been hailed by Reserve Bank of India Governor Raghuram Rajan as evidence his interest-rate cuts can revive the economy while banks fail to pull their weight.
One-year commercial paper rates dropped 72 basis points in 2015 to 8.30 percent on Monday, the lowest since 2010. By contrast, State Bank of India, the nation’s largest lender, cut its base rate just 30 basis points. The total amount of commercial paper outstanding was 2.71 trillion rupees ($40.8 billion) at the end of June, up 30 percent from December, the latest central bank data show.