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
RE:Loan rates Vs inflation
by pushparaj .k on Jan 30, 2007 11:02 PM Permalink
yes all the old loans should be at old rates ,it should not changed ,it may also considered against the LAW ,If the bank will increase such things ,then What will be in case of finance corporation ,who always charge more to what they say !?
RE:Loan rates Vs inflation
by akhil patil on Jan 31, 2007 10:33 AM Permalink
I think if we look from RBI's point of view, then incr in sal incr person's purchasing power (i.e. more amount of money will come in market), people will try spending more and therefore costs of major commodities may go higher. If RBI does not excercise its RRR policy then, costs will go up more and inflation rate increases. So as to curb that, RBI has to take steps so that lending banks will have less money to lend and therefore purchasing power is limited to one's own sal. I appreciate the discussion here. It was great. Akhil
