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RBI Governor on PSB merger and lending mechanism with NBFCs

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Talking of the current slowdown, he said signs were visible as early as February, and that 35 bps rate cut was necessary given the circumstances. Both counter-cyclical measures and structural reforms would be needed to tackle the slowdown, he added.On PSB mergers, Das said the exercise will create stronger entities because larger banks have greater leverage and reach.On bank interest rates, Das said the decision on spreads has now been left entirely to banks, to ensure faster transmission. The RBI didn't arm-twist any bank into adopting external benchmarks, he insisted.RBI hasn't asked any bank to lend or not lend to NBFCs; they will have to find market-based solutions to their problems, the Governor said.

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