ICICI Bank was the first lender to start cutting base lending rates
With inflation under control, lending rates will gradually come down as India is moving towards softer interest rate environment, largest private sector lender ICICI Bank chief executive officer Chanda Kochhar said on Tuesday.
ICICI Bank was the first lender to start cutting base lending rates, she said, adding, ‘a lot of transmission’ of monetary easing to borrowers has already happened.
". . . directionally we can say that a lot of factors and parameters have come under control, whether it is in current account (deficit) or fiscal side.
“Inflation is coming under control. So overall we are moving towards a softening interest rate environment," she said.
‘Clearly a lot of transmission has happened because if you see when the monetary policy rates gets cut then the deposit rates fall and the deposit form a only part of cost of funds for the banks", Kochhar added.
She said 30 basis points (0.30 per cent) rate cut has already happened ‘which is quite in line with the reduction in the cost of funds.’
The Reserve Bank of India has cut its benchmark rate by 75 basis points to 7.5 per cent in three tranches so far this year.
At the bi-monthly monetary policy earlier this month, RBI Governor Raghuram Rajan wanted banks to transmit more interest rate cuts to borrowers before he further eases monetary stance.
"Not only we were the first ones to cut rates we had actually cut them by a much larger amount than any other bank," Kochhar said.
"Gradually as cost of funds keep going down you would see interest rates coming down. Directionally, definitely we are in a softening environment but when and how much that is not something we can say."
Image: Chanda Kochhar, CEO, ICICI Bank. Photograph: Getty Images
