BoI, Union Bank follow, earnings to be impacted.
ICICI Bank, the country's second-largest bank on Friday hiked lending rates for new retail customers by 50 basis points and deposit rates by 50-100 basis points for deposits of 1-3 year maturities.
Union Bank of India on Thursday slashed its benchmark prime lending rate (BPLR) by 0.50 per cent to 12 per cent per annum, a day after RBI cut key rate by similar percentage points.
The country's largest public sector lender State Bank of India on Monday fixed its benchmark lending rate at 7.5 per cent following a Reserve Bank directive, a move that will end the practice of sub-prime loan to corporates.
Both lending and deposit rates would be cut, Punjab National Bank chairman and managing director K C Chakrabarty told PTI.
Finance Minister P Chidambaram on Tuesday said private sector banks will be forced to cut lending rates sooner than later due to competition from public sector counterparts.
Public sector lenders Canara Bank, Corporation Bank and Allahabad Bank have decided to lower interest rates on housing loans, preferring to keep their prime lending rates (PLRs) unchanged. ICICI Bank Managing Director and Chief Executive Officer K V Kamath has indicated that the country's second largest bank would review interest rates only in 2008-09.
Mortgage lender HDFC Ltd on Wednesday announced an increase in its benchmark lending rate by 5 basis points (bps), a move that will make loans dearer for both existing and new borrowers. This is the third hike effected by HDFC in the last one month. "HDFC increases its Retail Prime Lending Rate (RPLR) on housing loans, on which its Adjustable Rate Home Loans (ARHL) are benchmarked, by 5 basis points, with effect from June 1, 2022," the housing finance company said in a statement.
The Reserve Bank of India's (RBI) Monetary Policy Committee's (MPC) decision to cut the repo rate by 50 basis points (bps) to 5.5% was contrary to the expectations of many economists. Firstly, most of the economists expected the MPC to cut the repo rate by 25 bps citing the weakening of inflation, prospects of economic growth, geopolitical uncertainty and comfortable system liquidity.
Indian Banks' Association on Thursday said banks cannot lower their lending and deposit rates any further under the current scenario.
Finance Minister Pranab Mukherjee on Wednesday asked banks to cut interest rates and provide cheap credit to industry in order to spur economic activity.
State-run Punjab National Bank will cut its prime lending rate to 11 per cent effective June 1 from 11.25 per cent, its chairman S S Kohli told reporters on Monday.
Housing finance major HDFC and state-run Punjab National Bank on Tuesday announced up to 25 basis points increase in their lending interest rates, making their new and old loans expensive for consumers. The revised rates would be effective from March 1. Mortgage lender HDFC has increased its retail prime lending rate by 25 basis points to a minimum of 9.20 per cent.
A day after the Reserve Bank of India's monetary-tightening measures, banks on began raising interest rates, effecting the hike for the second time in a month.
The next generation GST reforms would 'absolutely' set an economy open and transparent with further reduction in compliance burden and benefiting small businesses, Union Finance Minister Nirmala Sitharaman said on Tuesday.
In a possible precursor to further rate cuts, Finance Minister Pranab Mukherjee's meeting with public sector bank chiefs on Monday will review their benchmark prime lending rates and interest rates on loans for automobiles, homes, small and medium enterprises and non-banking finance companies.
Banks had approached the Reserve Bank of India for such a clause for all BPLR-linked loans, which would have otherwise forced them to administer two types of benchmarks -- base rate and BPLR -- for many years if a borrower refused to switch to the base rate.
Public sector lenders led by State Bank of India said on Monday that they will look at further interest rate cuts.SBI chairman O P Bhatt told reporters after a meeting with Finance Minister Pranab Mukherjee that the bank is considering cutting its prime lending rate for the second time in as many months.
In view of rising deposit rates after the Reserve Bank of India announced a hike in repo rate*, bankers fear a pressure on lending rates, including in farm sector.
Home loans portfolios of swelled over the past couple of years as banks used the opportunity to expand their size, but in the process the Reserve Bank of India (RBI) was left worried.
The bank will give 3.25 per cent interest on savings bank deposits with a balance exceeding Rs 100,000. At present, the interest rate is 3.5 per cent.
State Bank of India has agreed to lend Vodafone-Essar, the joint venture between United Kingdom's Vodafone and Essar, Rs 10,000 crore to finance the company's entry into 3G (third generation) telecom services and expansion of its broadband operations.
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The repo rate continues to be at 8 per cent while the cash reserve ratio has also been retained at 4 per cent despite inflation based on the Wholesale Price Index coming down to a 5-year low of 1.77 per cent in October.
State Bank of India has no plans to hike its corporate lending rates in the short term, but said there was a chance of home loan rates going up after Reserve Bank of India tightened norms for the housing sector.
In a move that could provide succour to existing customers of troubled Global Trust Bank, its acquirer Oriental Bank of Commerce said on Monday that lending rates would eventually come down in line with the PSU bank.
On the extent of cut in lending rates, the SBI chief said 'it is difficult to say at this point of time' but indicated that it would not be less than 25 basis points. SBI earlier reduced the benchmark PLR by 75 basis points to 12.25 per cent with effect from January 1. Bhatt is in the capital to attend a meeting of state-owned bankers called by external affairs minister Pranab Mukherjee, who is also holding the finance portfolio.
Contrary to popular perception on interest rate movement, expected to head north following a likely central bank action on monetary tightening, banks may actually end by cutting rates in the below-prime lending rate region for at least their corporate clients. This is because of the huge pipeline of undisbursed loans the banks are sitting on and their scramble to bloat top line to reach closer to the yearly targets.
A day after the Reserve Bank of India announced a cut in bank rate, State Bank of India has reduced its prime lending rates and interest on domestic term deposits by 0.25 per cent across all maturities with effect from May 5.
Savings bank account holders are a happier lot. The reason: They will earn more on their deposits from April. However, this isn't good news for banks, as their margins will come under pressure
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