Interest rates will be revised from April 1, say experts
Posted on: 21/Mar/2016 9:40:17 AM
Banks will announce revised interest rates which will lower earnings on deposits, while making car loans cheaper. The new rates will come into effect from April 1.
Speaking about this, a senior official of a large public sector bank said, There is a possibility that interest rates will be revised as the new loan pricing norms kicks in from April 1. In addition, the cut in small savings rate by government will bring down the bank deposit rate. (The) asset liability committee (ALCO) will meet this week to review rates.
Another public sector official said, Lenders may wait till the monetary policy review, due on 5 April, to take a call on rates. The market expects the Reserve Bank of India (RBI) to cut interest rate by at least 25 bps.
The expectation comes in the wake of the government lowering the interest rate of small savings on Friday. Says a senior executive from SBI (State Bank of India), We welcome Governments decision, as SBI has been arguing for long-time that the transmission of monetary policy easing has not happened due to high small savings rates. RBI has reduced rates by 125 bps to a four-and-a-half-year low of 6.75 per cent while banks have transmitted up to 70 bps in their base rate. This is because high rates on small savings schemes make banks fixed deposits uncompetitive and in turn do not allow banks to reduce the cost of funds.
