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The policy rate reduction of 50 basis points by the Reserve Bank of India (RBI) since February is expected to boost demand and aid economic growth in the current financial year, the chief of Kotak Mahindra Bank said on April 12.
Uday Kotak, vice chairman and managing director, Kotak Mahindra Bank also added that the focus should be on achieving GDP growth at the rate of 7 percent.
"With the interest rates correcting...which the RBI has done over last two policies...I think it was very much needed to give a boost to demand and going forward with liquidity getting better, I'd like to believe that, we should still be focussed on a 7 percent GDP growth for the current year," said Kotak while commenting on the dismal growth in industrial production in March.
India's industrial output growth slowed to a 20-month low of 0.1 percent in February, owing to a contraction of the manufacturing sector, data released by the government showed on April 12.
Kotak said that the private lender may look at further reducing its marginal cost-based lending rates (MCLR) by the end of this month. "We have been reducing MCLR consistently over the last two months. We will re-look at the rates by the end of April," Kotak said.
In response to RBI's rate reduction of 50 basis points over the last two policy reviews, Kotak Mahindra Bank reduced its MCLR by 5-10 basis points in March and April.
From April 15 onwards,the bank has also announced a reduction in the savings bank deposit rate for balances up to Rs lakh by 50 basis points to 4.5 percent, down from 5 percent earlier.
Interest rates on savings deposits of Rs 1 lakh to Rs 1 crore and above Rs 1 crore remain unchanged at 6 percent and 5.5 percent respectively.
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