Zee Media Bureau
New Delhi: State Bank of India on Tuesday cut its lending rate by 15 basis points to 9.85 percent effective April 10.
This comes after the RBI early in the day kept the policy rate unchanged disappointing industry and consumers but a virtual war of words broke out with Governor Raghuram Rajan terming as "nonsense" the banks' refusal to pass on benefits on grounds of high cost of funds.
RBI maintained status quo in the first monetary policy review of current fiscal on fears of unseasonal rains impacting food prices.
The repo rate, at which the Reserve Bank of India lends to the banking system, will continue to be at 7.5 percent and the cash reserve ratio, which is the amount of deposits parked with the central bank, will remain at 4 percent. Bank rate has also been retained at 8.5 percent.
SBI Chairman Arundhati Bhattacharya said, "You have to understand both ways, it takes a little time for things to pass through. And, it is not only the cost of deposits that determines this.
"The passing through is also determined by the amount of liquidity, the amount of credit demand and competition which also drives rates up or down. There are very many factors and repo is only one of the factors."
With Agency Inputs
