Deposit rates to drop post credit policy

Source: IBN Live

 

The Reserve Bank of India, in it's credit policy yesterday, raised the Cash Reserve Ratio to 7%.

 

Clearly, the immediate effect of the RBI decision is a fall in the deposit rates by banks while the lending rates remaining unchanged.

 

The banks will no longer be in a position to offer short-term loans at discounted rates as part of the liquidity has being withdrawn by the RBI.

 

Thus if you have a housing loan with a floating interest rate, you can breathe easy, as rates are likely to remain steady in the near future. However, prospective loan seekers don't have much to cheer about, because interest rates are unlikely to fall any time soon.

 

"Banks would not increase lending rates, especially in retail loans as recent quarters have shown rising interest rates affecting the consumers' repayment capacity with corresponding increase in delinquencies," a market analyst told moneycontrol.

 

Three PSU banks - Canara Bank, Bank of Baroda and Bank of India announced a reduction in the deposit rates on their special 1-year deposit schemes by 50 basis points to 9%.