By Accommodation Times News Services
Home loan buyers may be soon benefited by lower interest rates on home loan, as lower their lending rates, State Bank of India (SBI) and HDFC Bank cut their base rates by 15 bps each, and ICICI Bank, by 25 bps, as RBI Governor Raghuram Rajan, blamed banks for not cutting their lending rates, even after two consecutive rate cuts by Central Bank.
During tomorrow’s monetary policy review by Reserve Bank of India’s (RBI) Governor, he kept the repo rate, at which the central bank lends to banks, unchanged at 7.5 per cent on fears of unseasonal rains impacting food prices.
While reviewing the policy he said, “There has been very little transmission from rate cut so far, we are waiting to see transmission take place. I have no doubt that this will happen. If it happens sooner it is better for the economy.”
The rate cuts on interest were announced immediately after the monetary policy announced, though many bankers were unenthusiastic regarding the rate cut.
The cash reserve ratio, which is the amount of deposits parked with the central bank, will remain at 4 per cent. Bank rate has also been retained at 8.5 per cent.
“I do not see an environment where credit growth is tepid, banks are sitting on money and their marginal cost of funding (has) fallen, the notion that it hasn’t fallen is nonsense, it has fallen,” Rajan said.
After his announcement and plain-speaking, leading bankers including SBI Chairman Arundhati Bhattacharya initially maintained that it takes time to lower the lending rates, which could happen in two or three months.
Later, SBI took the lead in effecting the rate cut, followed soon by HDFC Bank, whose CEO Aditya Puri had also hinted earlier in the day that it would take some time for rates to be cut by the lenders.