Skip to main content

Banks slash rates in New Year gift

By
The country’s largest bank State Bank of India (SBI)announced a steep interest rate cut in several years on Sunday,by reducing its marginal cost of funds based lending rate(MCLR)by 90 basis points(bps)across all maturities.
With this cut,SBI has passed on benefit of 200 bps since January 2015 to customers,which is more than 175 bps reduction in the Reserve Bank of India’s(RBI)policy rate cut in the same period.
The new rates come into force from today.SBI’s one-year MCLR stands reduced to eight percent from 8.9 percent,while the rate on overnight loans is now 7.75 percent,against 8.65 percent.
Banks are flush with funds after the note ban, with Rs.12.4 lakh crore having been deposited with banks till December 10.SBI chairman Arundhati Bhattacharya said, “There is huge liquidity with the bank due to the large flow of deposits. This has driven us to reduce lending rates,which, hopefully,will kick-start credit demand and growth.” Two other public sector lenders — Punjab National Bank(PNB)and Union Bank of India — also slashed their MCLR rates on Sunday.
Delhi-based PNB cut lending rates by 70bps,while Mumbai based Union Bank reduced its MCLR by 65bps to 90bps across different tenors.
Senior bank officers said other lenders would follow suit and reduce loan rates by 50-100 bps to remain competitive.Also,the actual benefit spread that banks charge over the loans rate.
The large deposits that came into banks since November 8 had raised expectations that banks would have room to cut lending rates,which is seen as vital to increasecredit growth and spark a revival in received aboutRs.1.5lakh crore in low-cost deposits in current and savings accounts(CASA).
The share of CASA in SBI’s total deposits was 42.74 per cent in September 2016,which has now gone up to 45percent
Business Standard New Delhi,02th January 2017

Comments

Post a Comment

Popular posts from this blog

RBI deputy governor cautions fintech platform lenders on privacy concerns during loan recovery

By
  India's digital lending infrastructure has made the loan sanctioning system online. Yet, loan recovery still needs a “feet on the street” approach, Swaminathan J, deputy governor of the Reserve Bank of India, said at a media event on Tuesday, September 2, according to news agency ANI.According to the ANI report, the deputy governor flagged that fintech operators in the digital lending segment are giving out loans to customers with poor credit profiles and later using aggressive recovery tactics.“While loan sanctioning and disbursement have become increasingly digital, effective collection and recovery still require a 'feet on the street' and empathetic approach. Many fintech platforms operate on a business model that involves extending small-value loans to customers often with poor credit profiles,” Swaminathan J said.   Fintech platforms' business models The central bank deputy governor highlighted that many fintech platforms' business models involve providing sm
Post a Comment
Read more

Credit card spending growth declines on RBI gaze, stress build-up

By
  Credit card spends have further slowed down to 16.6 per cent in the current financial year (FY25), following the Reserve Bank of India’s tightening of unsecured lending norms and rising delinquencies, and increased stress in the portfolio.Typically, during the festival season (September–December), credit card spends peak as several credit card-issuing banks offer discounts and cashbacks on e-commerce and other platforms. This is a reversal of trend in the past three financial years stretching to FY21 due to RBI’s restrictions.In the previous financial year (FY24), credit card spends rose by 27.8 per cent, but were low compared to FY23 which surged by 47.5 per cent. In FY22, the spending increased 54.1 per cent, according to data compiled by Macquarie Research.ICICI Bank recorded 4.4 per cent gross credit losses in its FY24 credit card portfolio as against 3.2 per cent year-on-year. SBI Cards’ credit losses in the segment stood at 7.4 per cent in FY24 and 6.2 per cent in FY23, the rep
Post a Comment
Read more

India can't rely on wealthy to drive growth: Ex-RBI Dy Guv Viral Acharya

By
  India can’t rely on wealthy individuals to drive growth and expect the overall economy to improve, Viral Acharya, former deputy governor of the Reserve Bank of India (RBI) said on Monday.Acharya, who is the C V Starr Professor of Economics in the Department of Finance at New York University’s Stern School of Business (NYU-Stern), said after the Covid-19 pandemic, rural consumption and investments have weakened.We can’t be pumping our growth through the rich and expect that the economy as a whole will do better,” he said while speaking at an event organised by Elara Capital here.f there has to be a trickle-down, it should have actually happened by now,” Acharya said, adding that when the rich keep getting wealthier and wealthier, they have a savings problem.   “The bank account keeps getting bigger, hence they look for financial assets to invest in. India is closed, so our money can't go outside India that easily. So, it has to chase the limited financial assets in the country and
Post a Comment
Read more