Karur Vysya Bank has decided to slash its base rate by 35 basis points to 10.40 per cent and the benchmark prime lending rate (BPLR) from 15.75 per cent to 15.40 per cent, effective from October 5.
The rate of interest on deposits of less than ₹1 crore is also expected to go down by 25 bps.
The bank now offers 8 per cent on deposits with term period of one year and above (half a per cent extra for senior citizens).
Commenting on this decision, KVB’s Chief Executive K Venkataraman told
“Lower interest rates during the busy season, which is just round the corner, will result in some pick-up in retail loans.
“Unutilised limits will get utilised and sluggish sectors, such as steel and infrastructure, would get a kick-start.” Asked to what extent such cuts would impact the bank’s margin, he said: “Our overall margin will not be impacted as we have front-ended our base rate cut. When the cost of funds comes down and volumes pick up, we don’t foresee any impact on our margins.”
“Cutting the rate is not an issue, but the rate at which we can offer the customer will matter,” the KVB chief said.
Venkataraman is quite confident that the bank would not lag others in the industry in its rate offerings. “We will need to be a bit more aggressive. Pricing will not be a limitation because of the deeper cut; our unique selling proposition will be in ensuring quality service,” he added.