Banks could reduce lending rates following the CRR cut by RBI
By Vaibhav Aggarwal
Sep 18, 2012
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Many public sector and private sector banks have hinted that they could reduce their interest rates on loans following the CRR cut by Reserve Bank of India.

The Managing Director and CEO of ICICI Bank, Miss Chanda Kochchar said that the CRR cut will ensure appropriate liquidity in the system. She further mentioned that the starting of the year saw RBI reduce its interest rates by 50 basis points. So, provided that comfortable liquidity position and CRR cut, banks could reduce their interest rates.

On the same note, Mr. Ajai Kumar, CMD of Corporation Bank said that the measures by RBI are welcomed and the rate cut has opened windows for the banks to slash their interest rates though the reduction in interest rates, if any, will not be solely influenced by RBI's recent cut in CRR.

Appreciating RBI's move, the CMD of Vijaya Bank, Mr. H. S. Upendra Kamath said that the CRR cut will help banks to reduce their dependence on high cost deposits. While the banks which are not dependent on high cost deposits will be able to utilize the amount for on lending. This would be beneficial to the banking system also.

According to S. L. Bansal, the CMD of Oriental Bank of Commerce, as a result of the move by the central bank, OBC could consider further reducing its base rate. A decision would soon be taken on the matter by the bank's asset liability committee. Borrowers could be relieved as many banks are contemplating a cut in the interest rates on loans provided by them.

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