Bank loans are becoming cheaper as they moved to marginal cost based pricing. MFIs rely on bank loans for lending.
West Bengal has seen doubling of its outstanding liability in excess of Rs 3 lakh crore in the course of last five years.
The 25 bps lower policy rate announced Tuesday along with the benefits arising from marginal cost based funding to make borrowing cheaper immediately.
According to RBI estimates, borrowing cost has already become cheaper by 25-50 bps even before the policy announcement with the new system being in place.
According to initial estimates by MFIN, the sector has seen about 60% growth this fiscal, almost similar to what it had witnessed the fiscal before this.
"Despite all sorts of threats by the management and coercive measures, nearly 90% of the officers and employees of the bank participated in the four days of strike," said Jagannath Raymandal, co-convenor of United Platform of IDBI Bank Unions.
The demand side constraint limits the upside potential in credit growth. Stressed private sector balance sheets and a less credit-intensive economic recovery has aggravated the concerns.
Since getting banking licences, the journey for these Bandhan and IDFC has been bumpy, unlike early entrants like HDFC Bank or ICICI Bank.
Bandhan Bank has retired high cost bank loans worth Rs 5,000 crore in the first six months of its being helping it to reduce cost of funds.
More importantly, banks are liberally lending to the small and medium sized micro lenders after the transformation of Bandhan into a bank.
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