Jaitley bats in favor of SBI interest rate cut

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"This is precisely why to keep the fixed deposits at the rate at which it was, because those are not rates which have been touched, those are the rates which affect retired and pensioners the most", the Finance Minister said.

He also said that the government insurer LIC has come out with a pension scheme to offer fixed rate of interest to investors.

The minister was speaking during a zero hour, and commented that the government already has a deposit scheme offering an over 8% interest rate.

Jaitley suggested that the NPA issue could be discussed when the house could debate on the banking amendment bill.

ETF AUM has grown approximately five times in last three years as it has been a preferred instrument for investment by Provident Funds following flexibility given to them by government for their investments.

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Jaitley said provisions under the Section 13 of the Prevention of Corruption Act are preventing certain banks from taking decisions on innovative steps to address the problem of the stressed assets.

He said at a time when inflation was running high at 10 per cent bank deposit rates were high at 9 per cent.

FM also defended State Bank of India's (SBI) decision to cut the interest rate on savings accounts of less than Rs 1 crore, saying the move was in sync with the reduction in lending rate. "The lending rates were high and sluggishness was setting in because of that", he said referring to an earlier period of higher interest on savings bank deposits.

The Reserve Bank, in its third bi-monthly monetary policy of the fiscal, yesterday had reduced the repo rate after a gap of nearly 10 months by 0.25 per cent to 6 per cent.

RBI Monetary Policy Committee (MPC) on Wednesday cut repo rate by 25 basis points (bps) to six percent, the lowest in last seven years, primarily due to a steeper-than-anticipated fall in inflation and maintained a neutral policy stance. With RBI cuts in lending rates, savings rates too have.

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