Banks unlikely to cut lending rates
SBI chairman Pratip Chaudhuri said his bank would make no changes to lending rates following RBI’s stance to maintain status quo. Chaudhuri added the demand for loans on the corporate side remained weak and loan disbursements were largely to retail customers.
SBI MD & CFO Diwakar Gupta said the bank has already implemented several rounds of rate cuts in recent past, including a base rate cut, leaving little scope for further easing. “Despite the rate cuts, loan volumes are below expectation. We expect a pickup only in the fourth quarter,” Gupta said.
Gupta said there was a case for a repo rate cut this time around, as this would have translated into further moderation of lending rates, and contributed towards reviving industrial sentiments. SBI’s base rate stands at 9.75%.
Aditya Puri, the MD & CEO of HDFC Bank, told a leading business channel that the cost of funds remains high making it difficult to cut rates. “So if there is substantial liquidity, which would mean something like R20-30,000 crore in Liquidity Adjustment Facility (LAF), then the cost of funds could change, and there is a very clear mechanism to reduce the base rates. If costs fall, I assure
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