Business Daily from THE HINDU group of publications
Thursday, Feb 21, 2008
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Business Daily from THE HINDU group of publications Thursday, Feb 21, 2008 ePaper | Mobile/PDA Version |
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Interest Rates Money & Banking - Public Sector Banks
Our Bureau
Mumbai, Feb. 20 Bank funds are getting cheaper. The country’s largest bank, State Bank of India, cut its interest rates for the second time in less than ten days. Several other banks including Union Bank of India, Bank of India and Canara Bank also followed suit. SBI announced a 0.25 per cent reduction in its benchmark prime lending rate, on Wednesday . The bank’s BPLR will be 12.25 per cent with effect from February 27, it said in an announcement to the BSE, today. Earlier, the bank had cut its BPLR by 0.25 per cent to 12.5 per cent from 12.75 per cent on February 11. According to a senior official from SBI, the dynamic market situation prompted the bank to take such a decision. “There is a general softening of rates around the world and that has a bearing on us. Other banks in India have also cut rates,” he said. When asked if SBI bank had plans to reduce deposit rates, he said it might do it when the time is right. “Everything is under review. As of now, we have cut only loan rates. We may cut deposit rates later,” he said. Union Bank cut its BPLR by 50 basis points from 13.25 per cent to 12.75 per cent. Canara Bank cut its BPLR by 25 basis points to 12.75 per cent. Bank of India also cut its PLR by 50 basis points. The slowdown in credit offtake, particularly to the retail sector, has been a matter of concern to both the government and the regulator. At his last meeting with the chiefs of public sector banks, the Finance Minister, Mr P. Chidambaram, had asked them to step up lending to the retail and productive sectors. In its quarterly review of the monetary policy, the Reserve Bank of India had also made a reference to how banks need to do more on credit delivery and expansion. Though the RBI had left key interest rates untouched, most banks have taken a cue from the implied instructions and reduced BPLR and lending rates to retail sector. According to a banking analyst, the rate cuts by banks are aimed at reviving the sluggish rate of credit offtake in the industry and fuelling further demand for retail loans. (Related reports: Page 6) SBI cuts prime lending rate by 0.25 percentage points More Stories on : Interest Rates | Public Sector Banks | State Bank of India
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