Bank loans set to become cheaper (GreaterKashmir.com) /2008

Bank loans set to become cheaper RBI quarterly review may give relief to borrowers BILAL HUSSAIN Srinagar, Jan 26: With indications rife that Reserve Bank of India may slash the cash reserve ratio limit for the banks by 50 basis points in its quarterly review on January 29, experts here believe the move would give a sigh of relief to the borrowers, while leaving a positive impact on economic growth of Jammu and Kashmir.

Experts believe the reduction would increase the investments, as borrowings would be available at lower rate. “The borrowers can take a relief as the interest rates would come down,” experts said.

Dean Social Sciences KU and noted economist Prof Nissar Ali said: “Housing loans and investment advances would boost local economy and there would be a positive impact Kashmir economy.” “The cut in the interest rate would envisage little more growth which currently is at 5.7 GSDP at constant prices,” Prof Ali said, adding that the relief in the interest rates means capital would become cheaper and demand for loans would rise.

However, Dean Management and Commerce Department, Kashmir University, Dr Mohi-ud-din Sangmi has slightly a different view. “Interest rate cut is a macro level measure and J K economy would not have a direct and significant impact,” he said. “Since there is no huge demand for advances in the state, the softening of the interest rate could trigger marginal increase in advances,” Sangmi believes.