Almost all banks have followed the Reserve Bank of India's move on rate cut. The prime lending rate (PLR) of most PSU banks has been reduced and those which are left behind in this race are also going to cut the rates soon. But the state-owned Jammu and Kashmir Bank is still evaluating the situation.

Parvez Ahmed, the Zonal Head Kashmir (Central), Jammu and Kashmir Bank, said that the bank would not react to the situation immediately. "We are evaluating the situation."

The bank's PLR that stand at 14.5% was hiked by 50 basis points with effect from August 1st, 2008.

PLR has been cut by most banks including the largest lender, SBI. Other like PNB, Andhra Bank, Allahabad Bank, Canara Bank and Oriental Bank has also announced a cut in their PLR. Even the foreign lender, Citibank has reduced its PLR by 50 basis points to 15%.

Now it is the turn of private lenders which are following a wait-and-watch policy to declare a rate cut. "The HDFC Bank and ICICI Bank too would go for rate cuts," said the market experts.

The PLR cut would make the home, vehicle and education loans cheaper as they are linked to this benchmark rate.

Bank are cutting their PLR following the RBI's decision that cut the short term lending rate (repo rate) to 7.5% and the mandatory cash requirement of commercial banks (CRR) to 6.5%. RBI also reduced the portion that banks need to invest in the form of government approved securities (SLR) to 24%. These measures by RBI have eased the liquidity crunch that had trapped the economy.

Jammu and Kashmir Bank is yet not reacting to these changes and planning to analyze the situation for now. The bank announced a rise of 7.53% in standalone net profit for the quarter ending September 2008.