Banks, RBI favour further cutback in small savings rates
These relatively high-yielding and guaranteed investment options are popular, especially with the middle- and lower-income households.
Synopsis
The central bank has been struggling to keep bond yields from spiking in a year that will witness record government borrowing, with North Block expanding its balance sheet to compensate for the lack of immediate private sector investments. However, relatively high small savings rates, considered politically sensitive, could make Mint Street’s task of lowering broader debt costs difficult.
Banks and the industry regulator favour a cut in small savings rates to help lower the cost of borrowing in the broader economy, which experts believe would need both fiscal and monetary support to return to a trajectory of sustainable growth.
The central bank has been struggling to keep bond yields from spiking in a year that will witness record government borrowing, with North Block expanding its balance sheet to compensate for the lack of
