After a 125-basis-point RBI repo-rate reduction over the last year, banks had demanded lower interest rates on small saving schemes. The government yesterday announced such a reduction to bring them on par with fixed-deposit rates. Which statement can be inferred?
Whenever RBI cuts repo, small-saving interest rates are also cut.
Small-saving rates are always on par with fixed-deposit rates.
Government sometimes considers banks’ demands before reducing small-saving rates.
Small-saving rate reductions occur only after an RBI repo-rate cut.
Correct answer: (C) Government sometimes considers banks’ demands before reducing small-saving rates.
Explanation
The passage supplies one instance in which banks made a demand and the government later made the requested reduction. This supports the qualified statement “sometimes”, C. It does not establish a universal rule about every repo cut, perpetual rate equality, or a necessary precondition for all future small-saving reductions.
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