FM Teaches Bank CMDs to Subvert RBI Rules

In the first news item, our Finance Minister, Mr Chidambaram asked banks in India to reduce their Base Rate.  On the face of it,  the news appeared to be a routine type as on number of earlier occasions too FM has cajoled banks to reduce their lending rates.  However,  this time FM asked for reduction in Base Rate (not lending rate). I was shocked as to me it appeared to be encouraging bank CMDs to flout the norms of RBI on base rate. I still remember that in 2010 when Base Rate was introduced by RBI, one of the major reasons for replacing the old BPLR was the fact that BPLR was not a transparent rate. Thus while introducing Base Rate, RBI laid down certain norms which banks have to follow on consistent basis so as to arrive at the Base Rate.  Thus, as per RBI guidelines, Banks are required to follow strictly the norms laid down by each bank on consistent basis..........

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