May not cut rates immediately, say bankers
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Bankers are in two minds following the Reserve Bank of India’s higher-than-expected policy rate cut by 50 basis points. One basis point is a hundredth of a percentage point.
Diwakar Gupta, chief financial officer of State Bank of India said the rate cut “may not translate immediately into across board lending rate cuts”. SBI is the country’s largest bank by assets.
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“Shorter term retail deposit rates may rise as they are cheaper,” he said, adding that the bank would decide on it later so that costs don’t rise significantly.
Bank of Indi’s executive director M.S. Raghavan said the bank “Will look at cutting lending rates post repo cut" but added that he does not "see feasibility of long term fixed loan products unless similar fixed rate liabilities raised by banks.”
The bank si also not not raising large bulk deposits, he said. .“The gap with retail deposits, if brought down, is positive in the medium term,” he added.
He also said the bank is not charging prepayment penalties on home loans
IDBI executive director RK Bansal said “lending rates (would) come down gradually, will take a call as deposit costs ease”.
“(I) See bulk deposit rates in the system easing rather than retail term deposit costs rising,” he said.