No cut in lending rates, say bankers

Apr 01 2014, 20:15 IST
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SummaryRuling out a cut in lending rates, bankers today said the status quo policy stance of the Reserve Bank will be followed by them, at least in the near-term.

Ruling out a cut in lending rates, bankers today said the status quo policy stance of the Reserve Bank will be followed by them, at least in the near-term.

"The bimonthly monetary policy came in on expected lines ... The only surprise in the policy is that there is no surprise... Since there is no fresh move in the policy, things (lending rates) will stay as it is for some more time," industry body IBA's Chairman and PNB chief K R Kamath said.

He was speaking to reporters at the customary post-policy press briefing at the RBI headquarters.

Country's largest lender State Bank of India's Chairperson Arundhati Bhattacharya said there is no room for rate cuts now, adding that the RBI has hinted at stability in the monetary policy with the latest announcement.

In the monetary policy review today, Reserve Bank of India Governor Raghuram Rajan left all key policy rates unchanged. But he halved the overnight call money borrowing limit to 0.25 of net demand time liabilities (NDTL) and increased the term repo window cap to 0.75 per cent from 0.5 per cent, to contain volatility in the money market.

When asked about the impact of these twin measures, bankers said there could be a marginal spike in cost of funds.

This would improve transmission of policy impulses across the interest rate spectrum and help establish market-based benchmarks for pricing various financial products akin to Libor for various currencies and different tenors, they said.

"We have to calculate the actual cost of funds with this action. Definitely there will be some impact on the cost. But it also depends on which side of the market you are on. However, there can be some cost pressure because of this," Bhattacharya said.

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