RBI Governor urges banks to pass on rate cuts to customers

Reserve Bank of India Governor Sanjay Malhotra on Tuesday held a meeting in Mumbai with the managing directors and chief executives of public sector banks, along with senior leaders from select private sector lenders.

During the interaction, he stressed the need for banks to transmit the recent policy rate cuts to customers, highlighting that such a move is essential to support sustainable and broad-based economic growth.

He emphasised that the benefits of monetary easing can only be fully realised if banks lower lending rates and improve credit conditions for both retail and corporate borrowers.

He added that the combination of rate cuts and increasing adoption of digital technologies should help reduce intermediation costs, enhance operational efficiency, and promote deeper financial inclusion.

The Governor also underscored the importance of stronger customer service frameworks, asking banks to minimise grievances, streamline internal processes, and improve transparency. With digital transactions expanding rapidly, he warned of rising risks of cyber and digital fraud, calling for more advanced, intelligence-driven security measures.

Appreciating efforts on re-KYC compliance and settlement of unclaimed deposits, he encouraged banks to continue proactive outreach and awareness initiatives.

The meeting, attended by Deputy Governors T. Rabi Sankar, Swaminathan J, Poonam Gupta, and S. C. Murmu, along with key Executive Directors, is part of the RBI’s ongoing engagement with senior management of regulated entities. The previous round of discussions was held on January 27, 2025.