The country’s largest lender State Bank of India (SBI) will cut the lending rates on select products if the Reserve Bank of India (RBI) reduces the cash reserve ratio (CRR), the percentage of deposits that banks have to keep with the central bank, in the quarterly review of monetary policy on April 17. “I would expect around 75 basis points (100 basis points equal 1%) point cut in CRR, and I am not too hopeful about repo rate cut,” said Pratip Chaudhuri, chairman, SBI, while speaking to reporters after a customary meeting of bankers with RBI officials ahead of the policy review.
Chaudhuri clarified that rate cut will be for segments where the interest rate is more than 13%.
“We will look more at cutting the spreads for the segment which are currently paying 13% plus,” he said.
This means home loans, auto loans and loans for better rated companies will not be benefited by SBI’s move as rates on these products are below 13%. The bank will not cut base rate if only CRR is cut.
Last month SBI had announced earlier to cut rates for Small and Medium Enterprises (SMEs).
“We held back ourself (on cutting rates for SMEs) because March 31st was coming and we wanted to be careful about the liquidity,” added Chaudhuri. The bank is likely to cut lending rate for SMEs in April.
Last month, RBI slashed CRR from 5.5% to 4.75%. With this, the central bank had infused Rs 48,000 crore into the economy.