"Liquidity per se, ideally speaking or rationally speaking, should bring down the interest rates...But this will take may be a month or two because the banks which have a lot of sanctions in the pipeline, which are yet to crystallize into disbursements," Indian Bank's Association Chairman T S Narayanasami said.

RBI today announced 1 per cent cut in mandatory cash requirement for banks CRR and short-term lending rate repo by 0.5 per cent.

It also announced cut in the requirement for banks to keep proportion of their deposits in government securities SLR by 1 per cent. The 1 per cent cut in CRR and Statutory Liquidity Ratio would infuse another Rs 85,000 crore into the system over and above Rs 1,85,000 crore already injected by the RBI.

ICICI Bank Joint Manging Director Chanda Kochhar said the RBI's move will bring down interest rates.

"Second it is showing the mindset of the regulator that is continuously monitoring the situation and coming up with measures on dynamic basis. I think these are two positives," she said.

CMD of Delhi-based Punjab National Bank, which yesterday cut benchmark prime lending rate, saw single digit rate coming soon. "We see single digit deposit rates soon," PNB CMD K C Chakrabarty.