FM Meets Bankers - PSBs See 100-200 BPS Rate Cut
After the acting Finance Minister Pranab Mukherjee met with the heads of various public-sector banks, expectation is rife that bankers may cut rates in response to the rate cuts effected by the Reserve Bank of India (RBI).
The acting Finance Minister, along with the Deputy Governor of RBI, said the meeting was aimed at looking for solutions to counter the adverse impact of the uncertainty in the global economy.
Mukherjee said that there is a need to concentrate on domestic demand creation. “We must support the development of those sections, which will immediately boost growth and throw up employment opportunities. In view of contracting global demand, we have to focus on development of domestic demand by primarily stimulating demand in the rural areas and in highly labour-intensive sectors,” he said.
After the Reserve Bank of India cut rates, banks have, for long, been expected to follow suit and cut their benchmark rates. Finance Secretary Arun Ramanathan said he expected bank to cut deposit rates.
Emerging from the meeting, KC Chakrabarty, the CMD of Punjab National Bank, said the bank has already cut the primary lending rates and that should translate into reduced home lending rates. He further added that the bank will cut rate as inflation falls. According to him, there is a scope for 200 basis points reduction in lending and deposit rates. UCO Bank CMD SK Goel also said he saw a scope for a 100-200 bps reduction in lending and deposit rates.
There were also reports that Corporate Bank will reduce deposit rates from tomorrow by 50-75 bps. Reports added that bank will reduce lending rates in retail sector by 50-100 bps.