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Last Updated : Dec 26, 2016 02:48 PM IST | Source: Moneycontrol.com

Banks could cut lending rates in January to boost consumption

Banks are expected to cut rates with increase in liquidity in the economy. Old currencies deposited with banks have pushed up the liquidity.

Moneycontrol Bureau

The subdued consumption in the country is likely to get a boost next month with big banks including the State Bank of India expected to cut lending rates, says a report in The Economic Times.

Since November 8, when the government banned high currency notes of Rs 500 and Rs 1,000, consumption had dropped due to shortage in money in hands of consumers.

Banks are expected to cut rates with an increase in liquidity in the economy. Old currencies deposited with banks have pushed up the liquidity.

The news report says that large banks are exploring the possibility of a rate cut and met up with the finance ministry last week to discuss the same. However, cash withdrawal limit is likely to remain same even after deposit deadline of December 30 for old notes.

Bankers believe that a rate cut could boost consumption and improve sentiment that has been down since demonetisation.

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First Published on Dec 26, 2016 10:18 am
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