Now private banks promise to cut interest rates

November 5th, 2008 - 7:13 pm ICT by IANS  

New Delhi, Nov 5 (IANS) A day after India’s state-run commercial banks said they will look at lowering interest rates, the private sector banks too have promised similar steps in a bid to reduce the cost of credit for households and industry.”The heads of foreign and private banks have assured that they would seriously examine a reduction of interest rates,” Finance Secretary Arun Ramanathan said after a meeting here Wednesday.

The assurances from heads of these banks came after the Reserve Bank of India (RBI) cut key rates and lowered the level of cash balance banks must compulsorily maintain in a bid to lower their cost of borrowings and infuse additional liquidity.

“They did say, liquidity is better now but liquidity continues to be an item which has to be monitored on regular basis,” said Ramanathan after the meeting, which was also attended by representatives of the RBI, India’s central bank.

A day earlier, Finance Minister P. Chidambaram was assured similar steps when he met with the chief executives of state-run commercial banks, which said a cut in prime lending rates was on the cards soon.

The chief executives of State Bank of India, United Commercial Bank, Punjab National Bank and the Union Bank of India, among others, said they will cut their prime lending rates by 25-75 basis points.

This is the base level for interest rates on loans extended to households or the corporate sector.

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