The Hindu Business Line : Banks to cut BPLR by up to 75 basis points

NEW DELHI: Six public sector banks including the largest, State Bank of India, have indicated that they will cut the benchmark prime lending rate (BPLR) by up to 75 basis points in the next few days, leading to cheaper loans for individuals and corporate s.

“Our Asset and Liability Committee (ALCO) should be meeting tomorrow and a decision to cut the prime lending rate (PLR) by at least 50 basis points would be taken,” SBI Chairman, Mr O P Bhatt said here after the meeting of public sector bankers with the Finance Minister, Mr P Chidambaram.

The announcement is likely to be made a day after, he said, adding that the proposed rate cuts would be effective beginning next week. Of the 27 public sector banks, a majority of them have their PLR between 13.5 and 14 per cent.

Asked whether other banks would also cut the PLR, Mr Bhatt said, “Every public sector bank present here (in the meeting) should be doing it.”

SBI last increased its PLR on August 12, from 12.75 per cent to 13.75 per cent. Bank of Baroda Chairman and Managing Director, Mr M D Mallya said that the bank is planning to cut the PLR by 75 basis points.

A decision on this would be taken by the ALCO during the week, Mr Mallya said.

Echoing similar views, Bank of Maharashtra Chairman and Managing Director, Mr Allen Pereira said, “We may reduce the PLR by 75 basis points in the next few days.”

Reduction in the PLR is significant as interest rates on all loans given by banks, fixed or floating, are linked to benchmark rates. Interest rates on all individual loans such as car, home or personal loans, move up and down along with increase or decre ase in the PLR. - PTI

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