New Delhi: With the Reserve Bank of India (RBI) stating that the banking system in India has ample liquidity, and the net interest margins (NIMs) of Indian banks pegged at relatively higher levels as compared to their international counterparts, many experts believe that there is enough room for the banks to cut lending rates.

The quarterly review of the monetary policy announced yesterday saw no change in key benchmark rates from RBI. Though, bankers and experts were speculating a cut in these rates RBI Governor had other thoughts in mind. Controlling inflation and maintaining price stability were given priority by RBI over global events such as the Fed rate cut.

RBI didn't buy the bankers stand that 'positive signals'  from RBI were needed for any further reduction in interest rates. The monetary policy review clearly indicated  that the liquidity conditions are good, and slowing credit demand can be taken care by providing competitive interest rates.

However, bankers feel that without a sufficient reduction in deposit rates, a substantial reduction in lending rates cannot be affected, and the competitive pressure is holding banks from reducing deposit rates and thereby erode their customer base. Though an immediate reduction in interest rates is ruled out by most experts, a review of the rates in the next quarter is very much on the cards.