Within hours of RBI slashing the cash reserve ratio (CRR) by 0.25 per cent, SBI on Tuesday hinted at a likely reduction in lending rates soon.
“Our bank, it’s for Alco (asset liability committee) to take a view. But we would prefer a more secular rate cut with the adjustment in the base rate because we have almost (done) rebalancing of the portfolio... but it is for Alco to take a final view,” SBI Chairman Pratip Chaudhuri said.
“I think our Alco would meet in a day or two,” he said.
At present, the base rate of SBI stands at 9.75 per cent. The bank last reduced its base rate downward on September 20 by 0.25 per cent.
The CRR, or the portion of deposits banks have to park with the RBI, now stands at 4.25 per cent, while the repo rate at which RBI lends to the system, has been left unchanged at 8 per cent at the second quarter review of the monetary policy.
Highlighting the impact of interest rate cut on the retail loan demand, Mr. Chaudhuri said, daily home loan sanction has tripled following the rate cut by the bank in August.
“We have greatly benefited by rate cutting because now the growth is coming in the retail segment, which is rate sensitive and ever since we have dropped our home loan rate our daily sanctions have almost tripled. Home loan sanctions used to be Rs 65 crore, now there are about Rs 150 crore per day,” he said.