Click to play videoNew Delhi: In a meeting with the country's top bankers, Finance Minister P Chidambaram on Tuesday said that Government banks must reduce interest rates for loans.
Chidambaram during the meeting said that the Government had done its bit in bringing more liquidity into the system and now the banks must bring down the cost of credit to keep India's growth going.
PSU banks took the lead from Chidambaram and indicated rate cuts. Listening to the Government’s cue on adding liquidity and lessening lending rates, more banks are now bringing down interest rates.
State Bank of India (SBI) has cut lending rates by 75 basis points, which will be effective from Monday. However, this goes hand in hand with deposits rates also coming down by 50 basis points; the latter effective from December 1.
Allahabad bank has also cut lending rates by 75 basis points to 13.25 per cent. These cuts will be applicable across all the sectors from Monday.
Dena Bank has also reduced its prime lending rates by 75 basis points to 13.50 per cent. Bank of India has also cut its prime lending rate by the same figure.
Sources say that Andhra Bank will also cut its deposit rate by 50 basis points, which will be effective from December 1.
And, now it is the turn of private banks to cut the interest rates. On Wednesday Finance Secretary Arun Ramanathan met private bankers and asked them to cut interest rates.
After the meeting Ramanathan said that private banks promised to examine the possibility of rate cuts.
Citibank was the first private bank to reduce PLR by 50 bps to 15 per cent.
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