Photographs: Reuters.
Leading banks, including SBI and ICICI Bank, on Tuesday said lending rates will fall after the Reserve Bank cut repo rate by 0.50 per cent.
The country's largest lender SBI said it will "substantially" cut lending rates soon. It, however, will not be an across-the-board rate cut.
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Home, auto and corporate loans to be cheaper
ICICI, the biggest private bank, said EMIs will fall as a result of the reduction in interest rate, but did not indicate the quantum of reduction or the timeframe.
It added that the cut will be across both deposits and lending rates.
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Home, auto and corporate loans to be cheaper
HDFC Bank too said deposit and lending rates will fall. At the post-policy interaction here, State Bank of India (SBI) Chairman Pratip Chaudhuri said, "Of course, there will be a transmission. The transmission of the last cash reserve cut also has not happened fully, as that came in March. We thought we will wait till the 17th (today) and do a comprehensive cut."
"Our asset liability committee (Alco) will be meeting this evening itself and take a call," he added.
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Home, auto and corporate loans to be cheaper
"A lending rate cut will not be across the board, but will be particular for those segments where the mark-up above the base rate is significantly high. So, largely in our case, it will be for SMEs, but it is for our Alco to take a call," he said.
ICICI Bank Managing Director and Chief Executive Officer Chanda Kochhar said, "I think consumers have to take that as good news".
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Home, auto and corporate loans to be cheaper
She added, "But how fast the transmission will take place and at what rate, is what we all will have to watch, depending on our cost of funds. This is clearly the beginning of a trend where EMIs would fall."
After 36 months of high interest rate regime, the Reserve Bank brought down repo rate at which it lends to banks by a 50 basis points to 8 per cent with immediate effect, as its policy focus has shifted to growth following consistent moderation in inflation.
The base rate of banks vary from 10 per cent to 12 per cent, while home loan rates are between 10.75 per cent and 14 per cent. Auto loans range from 12 per cent to 15 per cent.
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