'Softer interest rate policy to stay' New Delhi: Welcoming the 0.5 per cent cut in lending and deposit rates by State Bank of India, Finance Minister Yashwant Sinha on March 28 asserted that softer interest rate policy will continue, but asked Banks to reduce costs to improve efficiency.

Sinha was non-committal on rollback of dividend tax and excise duty cuts as demanded by industry, saying "whatever I have to say on this I will do so in Parliament when Finance Bill is taken up for discussion.

Asked if he expected a cut in bank rate by RBI, Sinha said it was for the Reserve Bank to decide. "My duty is to form the fiscal policy and it is RBI's duty to form the monetary policy," he said, adding it was for RBI to decide if the situation is conducive for it.

"The government has deliberately adopted a policy of softer rates as the industry was complaining that they could not be competitive if interest rates in India are high," he told reporters at the launch of smart cards and internet banking by Corporation Bank.

"Whatever we do with interest rates, there will be a large gap in bank rate and lending rates if transaction costs were not reduced by banks, he added.

PTI