RBI remains a Cassandra, and the rate cut won’t help

........................Will this rate cut help? The answer is a shoulder shrug. In the past, whenever the repo rate was cut, banks did not respond with alacrity to such changes in lending rates though deposit rates were lowered faster. One must remember that the repo rate is only a signalling mechanism and even if the average repo borrowing is, say, Rs 1 lakh crore a day on a regular basis for a year, the higher cost on account of the repo not being cut by, say, 1 percent is just Rs 1,000 crore...........

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