Union Bank and United Bank cut landing rates, others expected to follow soon.

Q: Within hours of rate cut announced by RBI, United Bank and Union Bank have reduced the benchmark lending rates by 0.25 % and 0.5 % respectively.

Veena K,

16th January 2015

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But RBI has to be careful of the inflation expectations if growth picks up while the savers also need to be provided with sufficient real returns for the savings rate in India to rise and reduce confidence on foreign money for growth.

Varun,

17th January 2015

Comment

While Kotak Mahindra Bank chief economist Indranil Pan said that with the first rate cut done, there is expectation that RBI will stay on course for more cuts of 0.25 % each in the near future.

Samrat,

17th January 2015

Comment

Bank of Maharashtra Chairman and Managing Director S Muhnot said many banks would now look at reliefing interest rates. We have already cut our base rate by 0.15 % last month in anticipation of rate reduction by RBI. Now we would look at some select sectors like MSMEs to reduce our spread.

Varun,

16th January 2015

Comment

Yes Varun, And echoing similar views, ICICI Bank CEO and Managing Director Chanda Kochhar said this is the beginning for more cuts to take place and there is room for further rate cut. So we should not assume that this is the only rate cut. Clearly this move including the movement in deposit rates brings down the cost of funds for banks. Sure the banks will make the rate cut benefits to consumers...The movement is in the direction of reduction in interest rates.

Samrat,

16th January 2015

Comment

While United Bank Of India chairperson Arundhati Bhattacharya said if State Bank of India is going to cut lending and deposit rate following the RBI action, definitely I think those cuts (deposit and lending rates) will happen. We have been talking for a while now about the easing of the rate cycle and deposit cuts. We thus believe that this cut may be just the beginning of a rate easing cycle.

Varun,

16th January 2015

Comment

EMIs for home, auto and other loans will come down with the reduction in base rate or the minimum lending rate which, in turn, will boost demand and motivated growth in the manufacturing sector.

After a gap of over one-and-a-half years, the Reserve Bank cut its key policy rate by 0.25 % surprising the markets early today.

Samrat,

16th January 2015

Comment

Yes Veena, other banks including market leader SBI have indicated that they would follow the requirements of. UBI is the second state-owned bank to announce rate cut after the Kolkata-based United Bank of India. The UBI will reduce the benchmark base rate from 10.25 percent to 10.00 percent with effect from January 27, 2015. It also announced cut in deposits rates for different buckets under retail and bulk deposits from 0.10 % to 0.50 %.
Earlier, the United Bank of India slashed its base rate or the minimum lending rate by 0.25 % to 10 %.

Varun,

16th January 2015

Comment