Mumbai: Bankers welcomed the Reserve Bank of India (RBI) decision Tuesday to cut key lending rates for the first time in nine months and said consumers can benefit from the move.
They said a final decision on interest rate cut will be discussed in the asset liability committee (ALCO) meeting on Wednesday.
"There will be some transmission of this (rate cut). We will keep a watch on the deposits side, but there will be cut on the lending side," ICICI Bank's chief executive Chanda Kochhar told reporters at the post-policy media interaction.
State Bank of India chairman Pratip Chaudhuri and HDFC Bank's managing director Aditya Puri also expressed similar views.
Reserve Bank of India Governor D. Subbarao said that the apex bank took the decision to cut both the key lending rates and cash reserve ratio, so that a transmission of benefit could take place from banks to consumers.
The repurchase rate, or the interest on short-term borrowings by commercial banks, has been cut by 25 basis points to 7.75 percent. The reverse repurchase rate, or interest on short-term lending, also stands lowered by 25 basis points to 6.75 percent.
The measures have the potential to lower the cost of borrowings for commercial banks and bring down interest rates on loans taken by households and commercial sector.