Cheaper loans in the offing

Loans could become cheaper for both companies and individuals with the Reserve Bank of India (RBI) freeing up R17,000 crore through a cut in the cash reserve ratio (CRR) on Monday. State Bank of India (SBI) chairman Pratip Chaudhuri said a final call on the rate cuts is expected to be made when SBI's asset-liability committee (ALCO) meets on Tuesday. "Our home and auto rates are already the lowest and we would like to make more cuts in the industrial and and SME spaces because there is scope to stimulate demand," Chaudhuri said on Monday.

ICICI Bank MD & CEO Chanda Kochhar said that with comfortable liquidity and the recent reduction in deposit rates by banks, interest rates in general could be expected to trend downwards gradually. "However, we will have to continue to keep an eye on funding costs given the level of CASA (current account and savings account) deposit growth in the system," she added.

MD Mallya, CMD of Bank of Baroda, said that the CRR cut is a very strong signal and added that once the funding costs come down the bank will look at loan rates.

"There is ample liquidity as far as our bank is concerned," he said, adding that the CRR cut will free up Rs 720 crore for the bank.

S Raman, CMD, Canara Bank, said that the bank is keen to cut lending rates but will have to contend with selective rate cuts for now. "We expect a policy rate cut at the October policy meeting, after which we could consider a base rate cut," he said. Canara Bank recently cut its home and auto loan rates and will look at other segments at its ALCO meeting to be held soon.

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