Let Bond Come to the Rescue
Apropos ‘Tilting at the Windmills’ by Mythili Bhusnurmath (Aug 7), RBI’s rate cut may not give a big push to fresh bank lending and growth. Bankers are wary of lending after the CBI arrested the former chairman of IDBI Bank for its loan to Kingfisher Airlines. The fall in income from fixed deposits will push depositors to invest in other instruments that yield superior returns. This, in turn, will hurt banks that lend to infrastructure projects. A more viable option would be to create a vibrant debt market. The government should remove regulatory hurdles in creating fully liquid deep bond markets.