A week after the Reserve Bank of India (RBI) delivered a second consecutive policy rate cut of 25 basis points, banks decided to pass it on to borrowers to some extent. But customers need not lose hope, as the central bank is expected to further cut rates in June policy review to support growth, in light of latest industrial growth and inflation data.
This, coupled with a likely new framework for faster monetary policy transmission may lead to lower interest rates going forward.
In February, India's industrial output recorded 20-month low growth of 0.1 percent, raising concerns on the country's economic growth trajectory.
SBI cuts lending rates, others follow suit
The country's largest lender, the State Bank of India (SBI) on April 10 cut its marginal cost-based lending rates (MCLR) by five basis points across tenors. The lender also reduced rates by 10 bps on housing loans of up to Rs 30 lakh. The applicable interest rate for such home loans will range from 8.6 percent to 8.9 percent per annum.
Other lenders like HDFC Bank and Bank of India also reduced their MCLR by 5-10 bps. Kotak Mahindra Bank, which cut its MCLR by 5-10 bps in March and April, may look at further revision next month, it's vice chairman and managing director Uday Kotak said. The private sector lender has announced a reduction of 50 bps to 4.5 percent for savings bank deposits of up to Rs 1 lakh from April 15.
Bank of Baroda takes measures after mega-merger
Bank of Baroda (BoB), which recently underwent a three-way merger with Dena Bank and Vijaya Bank, has increased interest rates on bulk deposits above Rs 10 crore by as much as 75 bps. From April 8, the lender increased its one-year bulk deposit rate to 7.3 percent. Interest rates on deposits maturing between 271-365 days and one-to-two years have been increased to 7 percent and 7.05 percent, respectively.
The lender, which has become the country's third largest bank post merger, also invited applications from advisory firms for its annual board evaluation review. It involves personal interviews of each board member and a plan of action for the bank's board.
Lakshmi Vilas Bank-Indiabulls Housing Finance merger
The RBI is likely to give its nod to the merger between the private sector lender-Lakshmi Vilas Bank (LVB) and the non-banking finance company Indiabulls Housing Finance (IBH), despite its deadlier aversion to entities with linkages to the real estate sector, industry experts said.
The regulator may consider IBH's current position with lesser exposure to real estate and LVB's current financial position that calls for capital support to prevent slipping under regulatory directions. The bank is likely to come under Prompt Corrective Action soon, as it has breached the first threshold already.
Published On : 14-04-2019
Source : Money Control
