Banks cannot cut interest rates any more: IBA chief

Banks cannot cut interest rates any more: IBA chief
PTI
Comment E-mail Print Share
First Published: Thu, Mar 26 2009. 07 37 PM IST
Updated: Thu, Mar 26 2009. 07 36 PM IST
New Delhi: Indian Banks’ Association on Thursday said banks cannot lower their lending and deposit rates any further under the current scenario.
“There is no more headroom for banks to cut their prime lending rates (PLR) and deposit rates in the near future,” IBA chairman TS Narayanasami told reporters on the sidelines of the annual conference of the industry chamber CII.
On the chances of rate cuts, with inflation nearing zero, by the Reserve Bank of India (RBI) to provide liquidity and cheaper funds to banks, the banker said these won’t help.
“RBI repo cut will not have any effect as G-Sec (government securities) is firming up. Today, it (10-year treasury bond yield) crossed over 7%,” Narayanasami, who is also the Bank of India’s chairman and managing director, said.
On lowering of cash reserve ratio (CRR), the percentage of deposits that banks are mandated to keep with the RBI, he said, “there is no need for further cut in the CRR (cash reserve ratio) as there is enough liquidity in the system.”
Pointing out that the RBI would be required to raise funds for the government through the market borrowings programme, he said, “RBI needs to be more intense with OMO (open market operations).”
Comment E-mail Print Share
First Published: Thu, Mar 26 2009. 07 37 PM IST