




Rs 1,00,000 crore into the country’s financial system, SBI is finalising plans to slash rates after the credit review of the Reserve Bank of India (RBI) on Friday. Even though loans will become cheaper, the bank plans to tighten the criteria for lending to individual borrowers.
“With a cash deposit ratio (cash in hand plus cash with RBI) of 9.88 per cent and cash reserve ratio (the portion of deposits banks keep with the RBI) of 9 per cent banks were left with only 0.88 per cent liquidity to supply credit in the market a fortnight ago. But with the RBI, bringing down the cash reserve ratio by 150 and 100 basis points over two weeks banks can now lend easily to retail borrowers,” highly-placed sources told The Indian Express.
However, the bank plans to go slow on commercial lending to the real-estate sector. With frequent advisories from the finance ministry and the RBI cautioning over exposure to the real-estate sector, banks have been going slow on lending to developers.
As a result real estate prices have begun to decline. “In the secondary market (market for existing property) housing prices have come down by 10-15 per cent in the past
six months. But price cuts in primary market (market for new homes) are still to occur. SBI’s move will be a bigger relief for existing home loan borrowers but for new borrowers, developers need to cut rates first before transactions pick up,” a senior real estate analyst based in Mumbai told The Indian Express.


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