Industry welcomes rate cuts

The industry has welcomed rate cuts announced by banks as it would give a leg up to both consumption and investment demand in the country.

The #State Bank of India (SBI) slashed the marginal cost of funding-based lending rates (#MCLR) by a steep 0.90 per cent. It was followed by #ICICI slashing MCLR by 0.70 per cent, #Kotak Mahindra Bank 0.45 per cent cut, #Dena Bank 0.75 per cent cut in its MCLR for one-year loans.

#Punjab and National Bank, #Union Bank of India, #IDBI Bank and #State Bank of Travancore have also made the cuts in lending rates.

“This reduction in the lending rates comes as a booster dose for the economy and will give a leg up to both consumption and investment demand,” said #Pankaj Patel, president of #Federation of Indian Chambers of Commerce and Industry (FICCI).

“It is heartening to see the banks moving forward towards an easier lending rate regime and we hope that this rate cut cycle will be carried forward. With ample liquidity now at their disposal and with credit growth moving a slow pace, a lowering of interest rates was the need of the hour,” he said.

“This is a clear positive that can be attributed to the demonetization move of the government and we hope to see more such decisions in the near future,” Patel said.

He noted Even the #Prime Minister Narendra Modi’s call on Dec 31, 2016, on banks the need to make extra effort to cater to the needs of the poor, lower middle class and middle class. These rate cuts announcements are a clear reflection of this intent.

The rate cuts were widely anticipated following a surge in deposits from the ban on high-value bank notes, Rs.500 and Rs.1,000.

The surge in deposits has sparked a race among the banks to woo consumers with cheaper home and vehicle loans. fii-news.com