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There is scope for further reduction by the RBI and even banks have room to lower their rate at a time when inflation is easing on week-on-week basis, he said on the sidelines of India MSME summit.
For the week ended January 31 inflation fell to over a 12-month low of 4.39 per cent, raising expectations of further cuts in policy rates by the RBI.
He said, "the Reserve Bank gives the signal, it's only when the banks cut the rates, then it makes the real difference".
The third quarterly review of monetary policy has observed that most banks have reduced interest rates to some extent, but there are some that are yet to do so.
Beginning this month PNB reduced its benchmark lending rate by 50 basis points to 11.50 per cent.
The bank also reduced interest rates on home, education, car as well as personal loans by up to 50 basis points from February 1.
The RBI, since mid-September, has aggressively cut policy rates and reserve ratios, injecting over Rs 4,00,000 crore funds into the system, signalling a soft interest rate regime since Lehman Brothers went for bankruptcy.
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The worthy CMD of PNB is continuously pleading and expecting RBI to cut interest rates whereas the other Bankers do not make such a hue and cry.He pleads for availability of deposits at cheaper rates for increasing the advances portfolio with the attraction of lower interest rates. PNB's maximum deposit rate is 8%pa whereas some other public sector banks are paying more than 9%. What more down than 8% he expects in the competitive market. He will have to make efforts for high-yield advances than depending on reduction in deposit rates to maintain viability of the Bank.