Banks start cutting rates

Interest rates on home, auto, personal loans and deposits are set to decline further following the RBI's latest move to cut key rates like repo...

Interest rates on home, auto, personal loans and deposits are set to decline further following the RBI8217;s latest move to cut key rates like repo, reverse repo and CRR. Shortly after the Reserve Bank announced reduction in benchmark rates, Union Bank slashed its deposit rates by as much as 1.35 per cent.

Allahabad Bank slashed benchmark prime lending rate BPLR by 75 basis points to 12.5 per cent effective next week.

Public sector banks confirmed that they would be announcing rate cuts shortly in response to the Friday8217;s stimulus package. 8220;I see it coming down further. While CRR cut will increase the income of the banks, other rates were indicative ones,8221; said OP Bhat, chairman, State Bank of India SBI, India8217;s largest bank.

ICICI Bank joint MD Chanda Kochhar said, 8220;These measures would accelerate the move to a lower interest rate regime across the banking system. We could expect a bottoming out of government bond rates and further decline in deposit and lending rates from the current levels.8221;

Bhat hoped that with the announcement of new stimulus package, the credit offtake may see a spurt from the middle of the month, particularly after Makar Sankranti.

Said KC Chakrabarty, chairman 038; managing director, Punjab National Bank, 8220;We had anticipated the monetary measures in advance and had announced few days back the cut in our interest rates effective January 1, 2009. Our ALCO asset liability committee is scheduled to meet in last week of this month and most likely we may lower the rates further as CRR reduction has infused liquidity around Rs 1,000 crore in PNB.8221;

Due to these monetary measures PNB8217;s credit-off take may grow at around 35 in the next fiscal. 8220;We will be able to protect our margins and profitability,8221; he said, adding that the RBI may further go for rate cuts in future if need arises.

Story continues below this ad

MD Mallya, CMD, Bank of Baroda, said, 8220;Our ALCO is scheduled to meet within 7-10 days and is expected to take a final call on the interest rates. The rates may go down as CRR reduction has infused liquidity worth Rs 700 crore in BOB. I do not rule out the possibility of more such monetary measures by the RBI in future.8221;

8220;With effective from February 1, 2009, we are lowering our lending rates as CRR reduction has infused liquidity worth Rs 600 crore into our bank,8221; said MV Nair, CMD, Union Bank of India.

Rana Kapoor, managing director 038; CEO, YES Bank, said, 8220;Our ALCO is meeting next week and is most likely to reduce the lending rates by 0.5 per cent and deposit rates by 0.5-1 for different tenors.8221;

8220;Our ALCO is scheduled to meet by the end of this month and is expected to lower the rates as CRR reduction has infused liquidity worth around Rs 100 crore in our bank.8221;8217; said J Moses Harding, executive vice president, IndusInd Bank.