Banks should reduce real rate of interest: PHDCCI

quot;In comparison with developed countries, our rate of interest is very high 8212; 16-18 per cent which makes it unattractive to investment growth,quot; PHDCCI said.

quot;The benefit of reduction in prime lending rate is hardly passed on to borrowers, particularly, small and medium enterprises,quot; PHDCCI President Ashok Khanna said adding that although lending rates had softened, banks continued to charge high interest rate due to high spread of these banks.

Banks should determine lending rates based on technical assessment of risks involved rather than on the basis of customers8217; perception andspreads should be reduced by increasing productivity and professional funds management.

Expressing concern at the declining credit-deposit ratio of banks while investment-deposit ratio has increased, he said it was an unhealthy trend for the growth of trade and industry depending on bank finance.