FADA demanded strict action from RBI over private banks delaying the reduction in auto loan rates

The country's top auto dealers body, the Federation of Automobile Dealers Association (FADA), has seriously leveled charges against private banks and sought the intervention of the Reserve Bank of India (RBI). According to FADA, whereas government banks are forthwith rolling over the benefit of repo rate reductions on customers, most private banks are consciously holding back the cut in interest rates on auto loans.

FADA Vice President Sai Giridhar wrote a letter to RBI Governor Sanjay Malhotra saying, "Under your leadership, RBI has cut policy interest rates at a historic rate, which has given a big boost to the economy. But its benefits are not visible in the auto retail sector, because private banks are not implementing it." Giridhar said that many banks are delaying the transfer of repo rate cuts to loan rates citing 'internal cost of funds', which is unfair to the customers.

FADA has asked RBI to keep tabs on interest rate pass-through at all banks and provide clear-cut guidelines for passing through rates in the time specified. Further, it has been stated to direct banks to place the cost of funds information in the public domain, so that transparency is provided.