Bankers do not see any immediate cut in lending rates
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Bankers do not see any immediate cut in lending rates

Last Updated: Tuesday, October 30, 2012, 18:32
 
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Bankers do not see any immediate cut in lending rates
Mumbai: Bankers on Tuesday ruled out any immediate reduction in lending rates, saying any step in that direction will be determined by the cost of funds.

They, however, indicated that interest rates could drop over a period of time.

After the RBI policy announcement in which cash reserve ratio was cut by 0.25 percent, leading bankers said this measure will not have any significant impact on their cost of funds.

"Lending rates are not going to come down immediately, though the rates may fall over a period of time," ICICI Bank Chief Chanda Kochhar told reporters during the customary post-policy media briefing.

State Bank of India was a bit accommodative, saying its asset liability committee (Alco) will meet in a day or two.

"I prefer a secular reduction in lending rates with a cut in the base rate. We have already passed on the previous CRR cuts to the borrowers. However, our Alco will be meeting in a day or two take a call on lending rate cuts," SBI Chairman Pratip Chaudhuri said.

On impact of the 13 successive rate hike by the central bank through March 2010 to October 2011, Chaudhuri said: "I do not think the 13 rate increases that happened helped in slowing inflation because today's inflation is largely due to cost push, and not so much demand-pull. Trying to address that with rate of interest as an instrument may not be very good."

On impact of the 0.25 percent CRR cut on SBI's cost of funds, he said, it will release Rs 225 crore and the outgo will increase by up to Rs 300 crore because of the additional provisioning.

He was quick to add "that should not be a problem as the bank has already budgeted a provisioning of Rs 10,000 crore for this fiscal. Asset quality is improving, it will be better in Q2 than in Q1".

HDFC Bank Managing Director Aditya Puri said interests are not going to come down anytime soon.
"We will examine the pros and cos of the move and there is a likelihood that the rates will go down over time, probably in the current quarter alone."

PTI



First Published: Tuesday, October 30, 2012, 18:32


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