Dont expect immediate cut in loan rates: Bankers

The State Bank of India was more accommodative,saying its asset liability committee will meet in a day or two. I prefer a secular reduction in lending rates with a cut in the base rate. We have already passed on the previous CRR cuts to the borrowers. However,our Alco will be meeting in a day or two take a call on lending rate cuts, chairman Pratip Chaudhuri said.

While consumer goods companies Whirlpools net profit has soared 98 per cent and Hindustan Unilever by 17 per cent,both have said cost cutting has been the basic reason for their socre cards. From April to August the index of industrial production for consumer goods has risen by only 3.5 per cent. It was just 4.4 per cent last fiscal too as high inflation and slowing growth squeezed demand from consumers.

Chaudhuri said the 13 successive rate hikes by the central bank through March 2010 to October 2011 has not softened inflation. I do not think the 13 rate increases that happened helped in slowing inflation because todays inflation is largely due to cost push,and not so much demand-pull. Trying to address that with rate of interest as an instrument may not be very good,he said.

HDFC Bank MD Aditya Puri said,We will examine the pros and cons of the move and there is a likelihood that the rates will go down over time,probably in the current quarter alone.

Provisioning for CDR up by 75 bps

The RBI has raised provisioning against restructured loans by 75 basis points from 2 per cent to 2.75 per cent with immediate effect. Banks are also advised to put in place a mechanism for information sharing. Any sanction of fresh loans to new or existing borrowers with effect from January 1,2013 should be made only after obtaining/sharing necessary information, said RBI Governor D Subbarao.