In case you increase the interest rates then the old loans must be at old rates.. RBI is lending money to financial institutions and banks I suppose.. RBI controls inflation rate.. Now inflation is 6% same as lending rate.. In case loan rate is increased top 8% naturally people will increase there charges and salary will have to be increased and inflation will become high by 8% Similarly is RBI looking for a profit for Govt of india.. Ideally in case inflation has to be cropped then loan rates have to be reduced.. But inflating loan rates is less important than recovery of loans which is more imporatant.. Regards Mahesh Nayathil http://www.maheshnbiomedical.com
