Inflation sub-zero, rate cut up to 100 bps on cards: Bankers
Globally prices of commodities have bottomed out. If it starts looking up then there could be reversal in the trend in the next few months. Top 10 challenges for India
By PTI |
NEW DELHI: With inflation turning negative for the first time in 30 years, banks are gearing up for interest rate cut up to 100 basis points.
"Interest rates should come down. We will take a look tomorrow as to how much deposit and lending rates further can be cut," UCO Bank Chairman and Managing Director S K Goel said.
"My rough estimate is that 100 basis points at least, we will be able to reduce," Goel said.
Kolkata-based UCO bank will hold its ALCO (Asset and Liability Committee) meeting tomorrow to take a view on rate cut.
Meanwhile, State Bank of Bikaner and Jaipur, the largest subsidiary of SBI, reduced deposit rates by up to 100 basis points on various maturities effective today.
The one to two years peak deposit rate has been reduced by 100 basis points to 7.25 per cent.
Last week, the country's largest lender State Bank of India reduced deposit rates across all maturities by 25 basis points.
According to Oriental Bank of Commerce Executive Director H Ratnakar Hegde, "Inflation below zero level would definitely result in reduction in interest rates."
Inflation turning negative is very much on the expected lines because even the Reserve Bank Governor in the annual monetary policy had indicated, Hegde said.
However, the Central Bank of India Executive Director Arun Kaul said this is temporary phenomenon and the decision on rates will not be based on one week's inflation data.
Interest rates are function of many factors he said, adding, yield on advances is yet to come down.
Globally prices of commodities have bottomed out. If it starts looking up then there could be reversal in the trend in the next few months.
Canara Bank Chairman and Managing Director A C Mahajan said "rates are going southward. Rates are expected to come down."
ALCO is meeting at the end of this month and appropriate decision will be taken, Mahajan added.
At the same time, the country's second largest private sector lender HDFC Bank has decided to slash its deposit rates by up to 25 basis point with effect from tomorrow.
"This reduction is in line with the market trends and taking into account the developments happening in the market in the recent past," said HDFC Bank Executive Director Paresh Sukthankar.
"Interest rates should come down. We will take a look tomorrow as to how much deposit and lending rates further can be cut," UCO Bank Chairman and Managing Director S K Goel said.
"My rough estimate is that 100 basis points at least, we will be able to reduce," Goel said.
Kolkata-based UCO bank will hold its ALCO (Asset and Liability Committee) meeting tomorrow to take a view on rate cut.
Meanwhile, State Bank of Bikaner and Jaipur, the largest subsidiary of SBI, reduced deposit rates by up to 100 basis points on various maturities effective today.
The one to two years peak deposit rate has been reduced by 100 basis points to 7.25 per cent.
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Last week, the country's largest lender State Bank of India reduced deposit rates across all maturities by 25 basis points.
According to Oriental Bank of Commerce Executive Director H Ratnakar Hegde, "Inflation below zero level would definitely result in reduction in interest rates."
Inflation turning negative is very much on the expected lines because even the Reserve Bank Governor in the annual monetary policy had indicated, Hegde said.
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However, the Central Bank of India Executive Director Arun Kaul said this is temporary phenomenon and the decision on rates will not be based on one week's inflation data.
Interest rates are function of many factors he said, adding, yield on advances is yet to come down.
ADVERTISEMENT
Globally prices of commodities have bottomed out. If it starts looking up then there could be reversal in the trend in the next few months.
Canara Bank Chairman and Managing Director A C Mahajan said "rates are going southward. Rates are expected to come down."
ALCO is meeting at the end of this month and appropriate decision will be taken, Mahajan added.
At the same time, the country's second largest private sector lender HDFC Bank has decided to slash its deposit rates by up to 25 basis point with effect from tomorrow.
"This reduction is in line with the market trends and taking into account the developments happening in the market in the recent past," said HDFC Bank Executive Director Paresh Sukthankar.
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