5 Dec : The country’s largest lender, State Bank of India, said on Friday that it would consider further cuts in the lending rates following the Reserve Bank’s monetary measures, to be unveiled on Saturday.
SBI will definitely consider rate cuts soon after the RBI slashes rates, SBI Chairman OP Bhatt told a news agency.The RBI is expected to announce monetary measures including reduction in key policy rates, signalling a soft interest rate regime to fuel growth.
The short-term (repo) lending and borrowing (reverse repo) rates indicate the stance of monetary policy, he said, adding, "this by itself is a signal. The rate cut is today a (piece of) global wisdom," he said.
RBI Governor D Subbarao said on Thursday that, "The Reserve Bank policy endeavour will be an orderly adjustment and to minimise the pain of its impact. In particular, we will try to maintain a comfortable liquidity position, and see that the weighted average overnight money market rate is maintained within the repo-reverse repo corridor."
Subbarao also said that the RBI will ensure that conditions are conducive to credit flow for productive sectors, particularly "the stressed export and small and medium industry sectors".
SBI reduced the benchmark prime lending rate (PLR) by 75 basis points following an appeal by the then Finance Minister P Chidambaram.It has also cut the deposit rates by 50 basis points.
Interest rate is a function of many things like inflation, supply and demand, Bhatt said, adding "it is afairly complex issue. Currently, the consensus is that the interest rate must move down and efforts are being made in that direction."