If you have taken a loan from a public sector bank, it is certainly the time to rejoice your decision. For, you have an edge over the consumers who have taken loans from private sector banks, as you can now avail cheaper loans.
While public sector banks, after recently being exhorted by finance minister P Chidambaram, have slashed their benchmark prime lending rates by 50 basis points (some banks have done it in two phases) private sector banks, except Axis Bank, have refused to budge.
The public sector and private sector banks have taken different stands on reduction of lending rates.
The public sector banks have maintained that the reduction would spur credit growth, which has witnessed fall in the first three quarters of the current fiscal.
Private sector banks have, however, justified their stand for not touching their lending rates by saying that the Reserve Bank of India has kept the key rates unchanged and consequently cost of the deposits have remained high.
?We have already cut down home loan rates by 50 basis points and may further cut down the rates by another 50 basis points,? SK Goel, chairman and managing director, UCO Bank.
KV Kamath, managing director and chief executive officer of ICICI Bank had said he did not expect the country?s central bank to ease key rates soon.
?Till we have clear signals we keep rates steady,?? he said adding that the bank would wait and watch.
?The policymakers have concentrated on inflation as the key target. I can?t see them easing at this point of time,?? he said.
Aditya Puri, managing director of HDFC Bank said the days of cheaper loans are over unless something changes very drastically. Interest rates get affected by various parameters such as inflation, cost of funds and supply of money. As inflation is currently on rise and the cost of funds not going down, a major reduction in interest rates is almost ruled out immediately, he explained.
Puri said the bank?s credit growth either in corporate or retail has not suffered because of rising rates.
According to Romesh Sobti, managing director & CEO, IndusInd Bank, the cost of funds for the banks which have not reduced rates have not fallen.
?In fact, the deposit have witnessed an upward trend in the quarter-end which has further resulted in the going up of the cost of deposits too during past one month,?? he said. To check inflationary pressure, the central had kept the short term lending rates steady at 7.75% in the quarterly policy review on January 29 but Reddy had opined that commercial banks could lower rates.
