Rate cut: Banks to wait till RBI decision on interest rates

Rate cut: Banks to wait till RBI decision on interest rates
PTI
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First Published: Sun, Oct 19 2008. 12 04 PM IST
Updated: Sun, Oct 19 2008. 12 04 PM IST
Mumbai: Bankers have said they would wait till the monetary policy is declared to take a call on lending rate cuts, despite the RBI announcing a hefty 2.5% reduction in cash reserve ratio (CRR), injecting Rs1,00,000 crore into the banking system.
Though leading public sector lender, Punjab National Bank announced a 0.5% cut in its home, auto and education loan rates after the CRR cut, several other banks said they would wait till the 24 October monetary policy before taking any decision.
The Reserve Bank is widely expected to cut key short term rates, apart from further reduction in CRR in the mid- term policy review and banks therefore do not want to rush into the matter.
“The liquidity conditions have eased following the measures from the central bank..however, we need to wait some more time before taking any decision on interest rates,” IDBI Bank chairman and managing director Yogesh Agarwal told PTI here.
In a high interest rate scenario, many banks had also stopped giving loans below the prime lending rates even to high-rated corporates.
If the central bank continues to infuse more liquidity in the system by way of a repo rate cut or allowing banks to borrow more through the LAF window, banks may look at re-opening the sub-PLR loan channel to corporates over the next two weeks, Kotak Mahindra Bank head of retail liabilities K V S Manian said.
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First Published: Sun, Oct 19 2008. 12 04 PM IST