The reflection of the decision taken by RBI starts taking shape in the form of certain changes in India’s largest private sector bank ICICI. Just two days ago it is the RBI that declares in cutting the interest rates by 0.50 percent and it is today ICICI declares as the first bank a cut in both the lending and deposit rate by 0.25%.
As per the information released by the bank the revised rate will be effect from 23rd April, 2012.
Being the first bank with a cut of 0.25 % the Chief Executive officer Chanda Kochhar and the Managing Director of ICICI says “With the easing of systemic liquidity, we have already seen some correction in wholesale deposit rates. We expect the cost of funds to gradually come down and this reduction in the lending rates is a proactive move by us to pass on the benefit to our valued customers,” in regards to explaining the reason behind this change.
However there are other banks such as HDFC, Punjab National Bank, also indicating the support and IDBI also announced a 0.25 percent cut in its lending rate and it can be clearly expecting of continuation of this kind of economic scenario with other banks.
As per Tuesday’s RBI policy it has lowered the CRR (cash reserve ratio) which was 1.25 % since January, releasing Rs 80,000 crore into the banking system. In addition to that RBI cut its policy interest rate much more than the expectation 0.5%, to encourage the rapid monetary policy transmission which is a much stronger sign for the banks.
As per the executive director of state-run Indian Overseas Bank A.K. Bansal said “If the RBI cuts rate, the implication is banks will pass it on to their customers. It looks a part of it may be passed on,” However in some or other way it will satisfy to a certain section of consumers as per this policy of RBI, India’s largest bank State Bank of India said it will allow a reduction in rates relating to certain loan areas.