State Bank of India (SBI) said on Monday it would not cut base rates in near future. Country?s largest lender, however, pruned retail deposit rates by 25 to 100 basis points. The bank has one of the lowest base rates in the industry at 10%. Last week, while ICICI Bank had lowered its base rate by 25 basis points to 9.75%, Punjab National Bank (PNB) and Bank of Baroda (BoB) too dropped their base rates by 25 basis points to 10.5%.

?A cut in the base rate would be lower loan rates across products and we don?t necessarily want an equal transmission across products. Since our home loans are already competitively priced at 10.25%, we want to bring down the cost of loans for the SME sector and auto products that are priced between 15 and 16%,? SBI chairman Pratip Chaudhuri told a television channel. Chaudhuri added that rather than drop the base rate, the bank was attempting to reduce spreads for customers to bring down rates to around 14-15% levels.

Speaking of the cut in deposit rates, the SBI chairman pointed out there was a fair amount of competition for savings with money moving to fixed income plans of mutual funds and other instruments that offered tax-free returns of 8%.

N Krishna Kumar, the managing director of SBI, observed that the bank was transmitting both the cuts in the cash reserve ratio and cut in the repo rate. ?We have a fairly high CASA ratio of 47% and the impact of lower deposit rates would be felt on term deposits,? Krishna Kumar said. Kotak Mahindra Bank and Deustche Bank joined the bandwagon on Monday announcing a base rate cut of 25 and 50 bps to 9.75% and 10% respectively. These banks said its customers for consumer loans including home and personal loans and those for corporate loans can now enjoy lower interest rates. United Bank

India (UBI) reduced its base rate and benchmark prime lending rate (BPLR) by 15 basis points and 25 basis points to 10.45% and 14.60% respectively. Deposit rates have been also reduced ranging between 10 basis points and 35 basis points. Down south, Lakshmi Vilas Bank cut term deposits between 25 to 50 bps. Other banks which have reduced lending rates since the Reserve Bank of India (RBI) announced a 50 bps cut in the repo rate last Tuesday are Syndicate Bank, Oriental Bank of Commerce, IDBI Bank and Bank of Maharashtra.

Samiran Chakraborty, the chief economist at Standard Chartered notes that deposits are likely to grow in the range of 14-15%, slightly better than the13% or so recorded in 2011-12. The RBI has projected deposit growth at 16% for 2012-13 while loan growth has been projected at 17%. Outstanding deposits for the banking system at the end of March, 2012 wereR63,14,400 crore at the end of March, 2012, compared with R55,81,600 crore at the end of 2010-11. RBI?s infusion of liquidity through cuts in the CRR of 125 basis points resulting in an infusion of liquidity to the tune of R80,000 crore has helped bring wholesale borrowing rates down. Further, RBI has enhanced the borrowing limit for banks under the Marginal Standing Facility to 2% of net demand & time liabilities and the rate at which banks can borrow is now 9%.