Rate cut to take some time, say bankers

Bankers on Tuesday ruled out an immediate cut in lending rates saying they will wait for the Budget, but termed the RBI policy review as growth-oriented as the reduction in SLR will release more funds into the system.

Commenting on the policy, wherein the RBI adopted a status quo stance, State Bank of India chief Arundhati Bhattacharya said the policy is in line with market expectations.

ICICI Bank Chief Executive Officer and MD Chanda Kochhar said: "The decision to hold the policy rates was expected given the rate cut just a few weeks ago, and in line with the RBI's approach of observing inflation trends over a period of time before taking policy action."

The RBI left the policy rates unchanged in Tuesday''s sixth bi-monthly monetary policy review, saying after the surprise January 15 cut there have been no data warranting a fresh easing today.

When asked whether SBI will cut lending rates, Bhattacharya said: "I think the Governor has very clearly said it takes time for these things to work itself into the entire industry.

" Unless we see the credit demand picking up, I think it's going to take a little time to cut rates."

Bank of India Chairman and Managing Director Vijayalaxmi Iyer said banks will take a call on rates post-March only as credit growth is yet to pick up and NPA problem persists.

Bhattacharya welcomed the flexibility regarding the DCCO (date of commencement of commercial operations) saying the move will enthuse companies with strong balance sheets to consider taking over stuck projects.

Photograph: Courtesy, 401(K) 2012/Wikimedia Commons