Ideally, the real lending rates should not be too much out of alignment with the real GDP growth rate. The data for the period 1990–91 to 2008–09 show that real lending rates were higher than real GDP growth particularly during 1997–98 to 2002–03 27 . This scenario has clearly changed since 2003–04 concurrent with the high growth phase of the Indian economy.
The opposite theory says that because shareholders are the most mobile, they are the ones least concerned with the long-term future of the bank or enterprise – unless they hold so many shares that selling them might inflict damage on the enterprise. Therefore, they favour short-term profit growth and pay little regard to long-term prospects.