Little scope to reduce lending rates

The 25 basis point reduction in the repo rate by the RBI might not be immediately passed on to customers, said S. Chandrasekharan, Executive Director, UCO Bank. “Most banks had reduced their base rates post the 25 basis point reduction in policy rates announced by Reserve Bank of India in January this year. So there is little scope for banks to reduce lending rates further, at least till March 31,”Chandrasekharan said. UCO Bank had reduced its base rate by 30 basis points to 10.2 per cent post the January announcement. Banks have also increased the interest rates on deposits in certain buckets, particularly for retail depositors. This was primarily due to liquidity pressure in the system, he said. “Unless the cost of deposits comes down it will be difficult to pass on the benefit by way of a cut in lending rates,” he pointed out. —

shobha.roy@thehindu.co.in


Source: thehindubusinessline