Private banks follow SBI’s lead, begin to pare down lending rates
MUMBAI: Two private sector banks slashed a key lending rate on Monday as a surge in deposits following the ban on high-value bank notes sparked a race among the country’s lenders to woo consumers with cheaper home and vehicle loans.
The rate cuts came a day after the country’s biggest lender, State Bank of India (SBI), slashed the so-called marginal cost of funding-based lending rates (MCLR) by a steep 0.90%.
While ICICI Bank, the country’s largest private lender, slashed its MCLR by 0.70%, Kotak Mahindra Bank announced a 0.45% cut. Another public sector lender, Dena Bank, also announced a 0.75% cut in its MCLR for oneyear loans (see box).
Banks base their final interest rate to customers on the MCLR and the rate cuts, one of the steepest since the 2008 global financial crisis, will lower interests on loans SBI Dena Bank ICICI PNB Union Bank Kotak Mahindra IDBI for new homes and vehicles.
SBI also unveiled on Monday new products and offered customers the option of migrating from the standard base rate to MCLR, adopted by banks last June and revised every month.
SBI chairperson Arundhati Bhattcharyya hinted there could be further rate cuts.
“We (SBI interest rates) are already far below the market, so we will see how this works. If the competition is high, we may change it later,” Bhattacharya said at a press conference.
Other state-run lenders such as Punjab and National Bank, Union Bank of India, IDBI Bank and State Bank of Travancore have also announced cuts in lending rates.
An estimated ` 14.9 lakh crore was injected into banks through deposits since Prime Minister Narendra Modi’s surprise announcement scrapping the old `500 and `1,000 currency notes on November 8.
In a New Year eve speech, Modi had asked banks to “keep the poor, the lower middle class, and the middle class at the focus of their activities” and to act with “public interest” in mind. CONT’D ON P6
SBI STARTS NEW YEAR WITH RATE CUT WAR >>P17 >>P2 NEW DELHI: There is a good chance there would be no Samajwadi Party or ‘bicycle’ in the Uttar Pradesh election, expected to be called any day now.
The warring factions of the Uttar Pradesh’s ruling outfit have brought their battle over the party symbol — a bicycle — to the election commission but it may be too late.
According to experts, in event of a split, the symbol will be assigned to the faction that has the support of the majority of legislators as well as parliamentary board members. The claim has to be backed by furnishing signatures to the poll panel.
But if the election commission doesn’t have enough time — which is a distinct possibility in UP — to verify legislative majority then the symbol could be frozen and both sides asked to pick new symbols and party names.
Though the split in SP is not official, competing claims have been made for the party symbol and leadership.
CONTINUED ON PAGE 6 ‘WEAK SP WILL HARM BJP’S PROSPECTS’ >>P8