Indian state-run banks to cut lending rates-report
MUMBAI, May 27 (Reuters) - Indian state-run banks plan to cut lending rates by 100-150 basis points in about two weeks on a finance ministry directive to follow the central bank's lead, the Economic Times said on Wednesday.
The cut is expected before June 12, when Finance Minister Pranab Mukherjee is scheduled to meet the chiefs of state-run banks to help boost loan growth, the newspaper said.
Officials at State Bank of India (SBI.BO), Bank of Maharashtra (BMBK.BO), UCO Bank (UCBK.BO), Corporation Bank (CRBK.BO) and Bank of Rajasthan (BOR.BO) confirmed the development, it said.
The central bank has slashed its key short-term lending rate by 425 basis points since mid-October last year, but the benchmark lending rates of five major commercial banks have fallen less than 200 basis points since then.
The paper quoted unidentified State Bank officials as saying it may reduce rates by 25 to 75 basis points as the fall in cost of funds for the bank was low.
State Bank of India's benchmark lending rate is now at 12.25 percent, while Punjab National Bank (PNBK.BO) was at 11 percent.
"The trends in interest rates have been moving downward. We have to cut interest rates further," the paper quoted Corporation Bank Chairman J.M. Garg as saying. The bank's benchmark lending rate is now at 12 percent.
UCO Bank Chairman and Managing Director S.K. Goel told the paper its benchmark lending rate would be cut to 8 percent from 12 percent now, over the next six months. (Reporting by Janaki Krishnan; Editing by Ranjit Gangadharan)
