Bank interest rates will have to be far more affordable, says FM Sitharaman

Union finance minister Nirmala Sitharaman

Finance Minister Nirmala Sitharaman on November 18 said that banks interest rates will have to be far more affordable.

"The cost of borrowing is really very stressful. And at a time when we want industries to ramp up and move building capacities, bank interest rates will have to be far more affordable," Sitharaman said at the 11th SBI Banking and Economics Conclave 2024.

The interest rate or repo rate of Reserve Bank of India (RBI) is currently at 6.50 percent. The central bank has been keeping interest rates at this level since the last 10 monetary policies.

The RBI in the October monetary policy has changed the stance to neutral from withdrawal of accommodation.

Last week, Union minister Piyush Goyal said that the RBI should "definitely cut interest rates".

On this, RBI governor Shaktikanta Das quipped that he will "reserve" his comments for the upcoming monetary policy in December.

Both Goyal and Das were speaking at the CNBC-TV18 Global Leadership Summit.

Sitharaman, on the inflation said that top three perishable goods which are causing stress onto the inflation numbers, whereas for the core others, the numbers are actually below four or three percent.

"India periodically and cyclically suffers from adequate supply of perishable commodities. We as a government are making a lot of efforts towards scientific and more rigorous storage facility for perishable commodities. So till you really get on the top of that issue, you will periodically have this problem of tomatoes, onions and potatoes, causing immense stress in a cyclical fashion," Sitharaman said.

India's retail inflation rose to a 14-month high of 6.2 percent in October from 5.5 percent in the previous month, as food inflation galloped on the back of rising vegetable prices.

The October reading was above the Moneycontrol's poll median of 5.9 percent from 15 forecasts, and breached the RBI's upper band target of 6 percent for the first time in more than a year, raising fears that the central bank may hold rates for the eleventh consecutive time at its meeting in December.

Shaktikanta Das last week said that Consumer Price Index (CPI) inflation is expected to moderated despite the rise in last few months.