Foreign Banks in the country are also moving on the steps of PSU banks on rate cut.
Foreign lender Citibank has declared a 50 basis points cut in its prime lending rate (PLR) to 15%. Similarly others like Standard Chartered Bank and HSBC are also expected to revise down their interest rates in the coming weeks.
Citibank, which has been the first amongst the foreign banks to announce a cut in PLR, is also expected to scale down its home loan rates by the same denomination in the coming days.
Both HSBC and Standard Chartered Bank said they are examining the current situation before taking a decision. A Senior Executive from Standard Chartered Bank said, "We would not react to the situation immediately. We are evaluating the situation, and the cost of funds has to come down, before reducing the lending rates. Our new business volumes are comparatively higher than other banks."
"We will observe the situation over the next two weeks before revising the PLR or what we call as mortgage variable reference rate. If lending rates come down, deposit rates too have to be reduced. Although the trend in the call money market looks comfortable now, there is still a lot of volatility," added the executive.
On November 5th, private sector and foreign lenders had met the finance ministry to discuss on money supply situations and lending rates.
On the other hand, most PSU banks have decreased their PLR and deposit rates. Punjab National Bank was the first public bank that had announced a cut in its PLR.