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PSU banks to wait for lending rates revision

The decision on revising lending rates will be taken only after RBI's measures to improve liquidity in the system, which is expected by this month-end.
None | By Press Trust of India, New Delhi
PUBLISHED ON MAR 25, 2006 02:35 PM IST

Public sector banks will take any decision on revising lending rates only after the RBI's measures to improve liquidity in the system, expected by this month-end.

Finance Minister P Chidabmaram had on Wednesday constituted a five-member sub-committee to talk to the Reserve Bank Governor Y V Reddy for augmenting lendable money in the system.

The Reserve Bank will announce some steps by March 31 to tackle the issue of liquidity and interest rates, Chidambaram had said on Wednesday.

"We are waiting for RBI's response to the liquidity situation," Oriental Bank of Commerce CMD K N Prithviraj told PTI.

The Finance Minister had on Wednesday taken note of bankers' suggestion, he said, adding "We have to follow that discipline. We cannot announce rate hikes abruptly."

But he added that any rationale for increase in interest rates will have to take into account the factor of cost of funds.

As the fiscal year is coming to an end, Union Bank of India Chairman said the bank would "wait and watch" the situation before taking any decision on revising prime lending rate.

OBC has a prime lending rate of 11 per cent, while Union Bank of India has PLR of 10.75 per cent.

Punjab National Bank Chairman S C Gupta was much more forthcoming as he said the bank is not revising its PLR. "It stands at 10.75 per cent today and it will stand at that level tomorrow and days after," he said.

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