Banks cut interest rates; loans to turn

Axis Bank, private sector bank in India, announced that the bank has reduced its base rate by 35 basis points to 9.50% with effect from October 05, 2015. (The move could pave the way for a relook at the system of base rates – the floor lending rate for banks – and the way it is calculated and more liquidity for rate signals to flow freely).

Chief Economic Adviser Arvind Subramanian said the government will now do “all that needs to be done”, including adhering to the fiscal deficit target and reviewing other policies, to facilitate rate cut transmission.

The Reserve Bank of India (RBI) on Tuesday lowered the benchmark repo rate, the rate at which it lends to banks, by 50 basis points from 7.25 per cent to 6.75 per cent while leaving the Cash Reserve Ratio unchanged at 4 per cent.

Kotak Mahindra Bank on Thursday reduced its base rate from 9.75 per cent to 9.50 per cent with effect from October 5 according to the bank’s filing on the BSE.

Axis Bank cut its base rate by 0.35 per cent, while the reduction by IDBI Bank was 0.25 per cent. The fourth reduction in the repo rate so far this year has taken it to the lowest level since early 2011.

NEW DELHI (AP) – India’s central bank on Tuesday cut its key interest rate by half a percentage point, aiming to spur economic growth as inflation cooled to the lowest since November.

In view of the falling consumer price inflation and less fears of a imported inflation due to a rate cut by the United States Fed, the Central Bank had brought down the bank rate. However, there is no change in CRR and SLR. while complimenting Union Finance Minister Arun Jaitley for impressing upon RBI to make impressive cut in repo rates said that it was long awaited demand of trade and industry including CAIT which has exceeded the expectations. “Going ahead, weakening of rate will add to growth of credit”, Bhattacharya said.

A 25 bps cut in December could be a possibility, but domestic data points have to be incrementally positive, Shah said. “The revised base rate will be applicable to new as well as existing loans”, Karnataka Bank said in a statement.