In its fourth bi-monthly monetary policy for the current fiscal, RBI cut benchmark repurchase (repo) rate by 0.50 per cent to 6.75 per cent(lowest in four-and-half-years.)
State Bank of India on Tuesday slashed its benchmark lending rate by 0.4 per cent to 9.3 per cent after the Reserve Bank of India cut repo rate by 50 basis points.
With the reduction in the base rate, all loans, including home, auto and corporate, would become cheaper by at least 0.40 per cent with effect from October 5.
“RBI has cut interest rate by 0.50 per cent, we have reduced it by 0.40 per cent,” SBI Chairperson Arundhati Bhattacharya said.
The bank will also be cutting fixed deposit rates by 0.25 per cent across various maturities from October 5, she added.
“We will definitely keep looking at ways and means of bringing down rate further. Going ahead, weakening of rate will add to growth of credit,” Bhattacharya said.
Andhra Bank was the first bank to cut its rates immediately by 0.25 per cent after RBI announced the monetary policy review.
Here is Sunil Jain, Managing Editor of The Financial Express’ take on RBI rate cut:
In its fourth bi-monthly monetary policy for the current fiscal, RBI cut benchmark repurchase (repo) rate by by 0.50 per cent to 6.75 per cent(lowest in four-and-half-years.)
Naveen Kukreja, managing director, Paisabazaar.com, said, “The 50 basis points cut was much than the market was expecting. This time it is a large cut by the RBI, we believe banks will surely pass the cut to retail borrowers on immediate basis. I expect banks will pass the cut between 30 basis points to 40 basis points to borrowers.”
“While banks’ base rates are expected to come down by additional 25-50 bps over next one year, on account of earlier rate cuts, the full benefit of current rate cut of 50 bps (in terms of cut in base rate by banks) will be dependent on RBI’s new guidelines on base rate, which are likely to be applicable from April 1, 2016,” Naresh Takkar, MD & group CEO, ICRA said.