Public sector banks to cut rates soon
The Times of India, April 22, 2009, Page 24
Along with ICICI Bank, Yes Bank, also cut its PLR by 50 basis points shortly after after the RBI announcement. Public sector banks are also likely to cut their prime lending rates soon.
This is the seventh time the RBI has cut rates since the global financial turmoil erupted in September 2008. In this period, the central bank has reduced the repo rate from 9% to 4.75% and the reverse repo rate from 6% to 3.25%. Besides, the RBI also took a number of measures to infuse liquidity in the banking system. Subbarao said RBI has so far injected Rs 4,20,000 crore into the system since October 2008 and would continue to maintain comfortable liquidity.
Public sector banks like State Bank of India, Punjab National Bank, UCO Bank, Bank of Baroda, Canara Bank, Central Bank, Bank of Baroda, Indian Bank and Oriental Bank of Commerce, among others, said they were likely to cut interest rates. UCO Bank chairman SK Goel said his bank would cut the BPLR by 25 basis points.
SBI chairman O P Bhatt said SBI’s asset liability committee (ALCO) will soon meet to decide on the rate cut. SBI has already cut its BPLR by 1.5 percentage points since October to 12.25%. Similarly, chairmen of other banks also said their respective ALCOs would meet soon to decide on rate cuts. Cuts in lending rates will be accompanied by reduction in deposit rates. IDBI Bank’s CMD Yogesh Agarwal said the cut in policy rates by RBI was aimed at easing the liquidity situation, but the bank would watch the market conditions before revising its rate-structure.
Bankers raised apprehension over the huge government borrowing, which might push the demand of funds and so drive up lending rates. At the same time, on the cost of funds, bankers also pointed out their inability in cutting the deposits rates below the small savings rates, like post office deposits at 8%. Bankers said that unless the deposits rates are brought down, the lending rates could not be cut.
RBI governor Subbarao allayed any fear of crowding out of funds due to huge government borrowings. He said RBI was taking enough measures like purchasing of government securities from the market and unwinding of securities bought by government under market stabilization scheme
The Times of India, April 22, 2009, Page 24
Along with ICICI Bank, Yes Bank, also cut its PLR by 50 basis points shortly after after the RBI announcement. Public sector banks are also likely to cut their prime lending rates soon.
This is the seventh time the RBI has cut rates since the global financial turmoil erupted in September 2008. In this period, the central bank has reduced the repo rate from 9% to 4.75% and the reverse repo rate from 6% to 3.25%. Besides, the RBI also took a number of measures to infuse liquidity in the banking system. Subbarao said RBI has so far injected Rs 4,20,000 crore into the system since October 2008 and would continue to maintain comfortable liquidity.
Public sector banks like State Bank of India, Punjab National Bank, UCO Bank, Bank of Baroda, Canara Bank, Central Bank, Bank of Baroda, Indian Bank and Oriental Bank of Commerce, among others, said they were likely to cut interest rates. UCO Bank chairman SK Goel said his bank would cut the BPLR by 25 basis points.
SBI chairman O P Bhatt said SBI’s asset liability committee (ALCO) will soon meet to decide on the rate cut. SBI has already cut its BPLR by 1.5 percentage points since October to 12.25%. Similarly, chairmen of other banks also said their respective ALCOs would meet soon to decide on rate cuts. Cuts in lending rates will be accompanied by reduction in deposit rates. IDBI Bank’s CMD Yogesh Agarwal said the cut in policy rates by RBI was aimed at easing the liquidity situation, but the bank would watch the market conditions before revising its rate-structure.
Bankers raised apprehension over the huge government borrowing, which might push the demand of funds and so drive up lending rates. At the same time, on the cost of funds, bankers also pointed out their inability in cutting the deposits rates below the small savings rates, like post office deposits at 8%. Bankers said that unless the deposits rates are brought down, the lending rates could not be cut.
RBI governor Subbarao allayed any fear of crowding out of funds due to huge government borrowings. He said RBI was taking enough measures like purchasing of government securities from the market and unwinding of securities bought by government under market stabilization scheme
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