PNB slashes interest rate, bankers welcome CRR cutOctober 16th, 2008 - 12:01 am ICT by IANS
Mumbai, Oct 15 (IANS) The state-run Punjab National Bank Wedensday night decided to reduce interest rates on housing and car loans by 50 basis points after the Reserve Bank of India slashed the Cash Reserve Ratio (CRR) again.PNB chairman and managing director K.C. Chakrabarty said: “Our bank is the first bank to reduce interest rate on the above loans to pass the CRR cut benefits to our customers.”
Earlier in the day, the central bank further cut the CRR by 100 basis points to 6.5 percent to release Rs. 40,000 crore or Rs. 400 billion (over $10 billion) into the system. RBI had earlier cut CRR or the minimum balance banks have to maintain against deposits to 7.5 percent.
The bankers welcomed the RBI move but said the softening of interest rates will take some time.
ICICI Bank joint managing director Chanda Kochar said: “A CRR cut was needed. I don’t see this will have any impact on deposit rates or lending rates.”
Indian Overseas Bank chairman and managing director S.A. Bhat said, “This Rs.400 billion induction of liquidity is certainly a welcome step. But I Still feel the industry is short of Rs.200 billion.”
Bank of India chairman and managing director T.S. Narayansami said: “This is to fight the liquidity crunch that the banking industry is facing. In the immediate future there may not be a surplus of liquidity but it will be a well balanced situation.”