| Table 1: Rate reduction by Reserve Bank
(Since mid-September 2008) | | (expressed as percent) | | Instrument | As at | Extent of Reduction | | Mid-September 2008 | Early March 2009 | (basis points) | | Repo Rate | 9.00 | 5.00 | 400 | | Reverse Repo | 6.00 | 3.50 | 250 | | Cash Reserve Ratio | 9.00 | 5.00 | 400 | | @ Percentage of NDTL. | Banks: All PSBs and most private banks lowered the rates on term deposits and PLR following - (i) RBI’s lowering of policy rates and easing of liquidity (ii) Government’s assurance for favourable policy. (See table 2) | Table 2: Deposit and Lending Rates Reduction during Oct 2008 – Apr 2009* | | (all rates in basis points -bps) | | Bank Group | Deposit Rates | Lending Rates (BPLR) | | Public Sector Banks | 125-250 | 125-225 | | Private Sector Banks | 75-200 | 100-125 | | Five Major Foreign Banks | 100-200 | 0-100 | | * As on April 18, 2009. | It can be seen that against the RBI rate cut of 400 basis points, the BPLRs lowered by the banks between October 2008 and April 18, 2009, ranges betwen125-225 basis points: giving rise to flurry for ‘more scope for rate cuts’. |
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