RBI cuts rates again

RBI announced 50-basis-point cuts in repo and reverse repo rates. After the Reserve Bank of India announced a 50-basis-point cuts in repo and reverse repo rates on Wednesday, at least three public sector banks announced a reduction in lending and deposit rates. However, private sector banks such as ICICI Bank and HDFC Bank are yet to take any decision.

The banks that cut lending rates on Thursday include Bank of Baroda, Union Bank of India and United Bank of India. BoB and Union Bank of India lowered the prime lending rate by 50 basis points to 12 per cent with effect from April 1. The Kolkata-based United Bank of India cut the PLR to 12.5 per cent with effect from March 5. BoB also reduced deposit rates by 50-75 basis points, across various maturities. United Bank of India cut deposits rates by 25-50 basis points across various maturities effective March 6. Canara Bank said it will cut interest rates on home and vehicle loans. The bank will also cut deposit rates by 25-75 basis points with effect from March 11.

A lower PLR will lead to a cut in the rates for all loans, including home and auto finance. Naturally, real estate developers have welcomed this move of rates cut by RBI in the hope that home loan rates will come down further and demand will go up.