With the Reserve Bank of India taking a number of steps to shield the economy from the spillover effects of the global financial crisis, bankers on Saturday said that the steps would induce banks to cut lending rates like commercial, home, auto loans as well as deposit rates.

Soon after the RBI’s announcement, IDBI Bank reduced its home and educational loan rates by 50 basis points with immediate effect. The rate cut would be applicable to both existing and new customers, the bank said. Following the revision, home loans would now be available at an interest rate of 11 per cent against 11.50 per cent earlier. Simultaneously, the margin on housing loans has been enhanced from 15 per cent to 20 per cent for loans of up to Rs 30 lakh and to 25 per cent for loans over Rs 30 lakh, the bank said.

Punjab National Bank which had cut home and personal loan rates last week, had reduced prime lending rate (PLR) on Friday. Other banks are expected to come out with a rate revision in the coming weeks.

Reeling under pressure of costly borrowing, corporates will surely heave a sigh of relief as the cut in CRR, statutory liquidity ratio (SLR) and repo rate by RBI will ease liquidity in the system thereby lowering interest rates.

ICICI Bank joint MD Chanda Kochhar said that the steps taken by the banking regulator will bring down interest rates. “It shows the mindset of the regulator that is continuously monitoring the situation and coming up with measures on dynamic basis,” she said.

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