Borrowers will have to wait a bit longer for relief from elevated interest rates as bankers have ruled out any immediate cut in the lending rate.
Even after the Reserve Bank of India has delivered two successive rate cuts this year, banks have ruled out any immediate rate cut, citing high cost of funds.
"The basic thing that is required - the cost of deposits - is still in the higher side," state-run Union Bank of Indiachairman and managing director Mr. D Sarkar said, explaining bank's inability to cut rates now.
State Bank of India's Chairman, Mr. Pratip Chaudhuri also said that it is impossible for his bank to cut lending rates in near term.
Most of the state-run banks generally rely on the costly bulk deposits to increase their deposit bases unlike private sector banks, which mop up the low-cost savings and current account deposits, and banks have been steadily increasing their term deposit rates for the past few months.