Price data force IDBI to scrap rate cut plan

With inflation soaring to a 40-month high of 7.41 per cent, IDBI has said it would not be cutting its Benchmark Prime Lending Rate BPLR soon. The bank was earlier mulling a cut in its BPLR, which now stands at 13.75 per cent. Last month, IDBI had announced its decision to effect a 0.50 percentage point downward revision, which it put on hold. Citing 8220;prevailing market conditions8221;, IDBI had said it would review the situation in two weeks. 8220;After seeing the latest inflation figure 7.41 per cent, we have decided not to reduce our BPLR. A cut in lending rates may not be prudent since the Reserve Bank of India RBI might hike the Cash Reserve Ratio in its credit policy if inflation remains high,8221; IDBI chief financial officer R K Bansal said on Friday. The RBI is scheduled to announce its monetary policy for fiscal 2008-09 on April 29.