Lending rates to fall, deposit rates to hold, say bankers
Aditya Puri MD, HDFC Bank said there will be monetary transmission happening.
Earlier, RBI announced a cut in the rate at which it lends to the commercial banks by 25 basis points (100 basis point is 1 percentage point) and also brought down the reserve requirement by 25 points from 4.25 per cent to 4 per cent thereby infusing an additional Rs 18,000 crore into the system. Both the measures will help reduce the cost of funds for banks.
While some banks have been quick in taking their call, there are others who feel that a cut is tough now and the situation may get fully revealed only in February.
SL Bansal, CMD of the Oriental Bank of Commerce said, “It would depend on the ALCO decisions of individual banks on whether the reduction would come immediately or in a week or two,” he added.
The Indian Overseas Bank said that there is a clear case for policy transmission on lending rates by banks but said that it would be challenging.
M Narendra, CMD, IOB, said, “It will be a challenge for banks to pass on the benefit of the rate cut to push growth and consumption demand without impacting the already slowing deposit growth.”
Punjab National Bank was, however, of the view that
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