A former board member of the Reserve Bank of Australia says "some form of inquiry" into the banks would be helpful, comments which will bolster the federal opposition's demands for a royal commission into the scandal-plagued sector.

John Edwards, who until last week sat on the board of the RBA, said the central bank would have intended that the commercial banks pass on in full the cut to interest rates worth 25 basis points. The Reserve cut rates to an historic low of 1.5 per cent on Tuesday citing concerns about low inflation and confidence that it would not spur excessive housing prices.

But the banks have only passed on part of the cut to borrowers: