Indian small banks adopt the policy of wait and watch on cutting of lending rates

Most of the bigger banks have slashed their lending rates after the persuasion from FM and the Reserve Bank of India.

According to bank officials many of the small and medium Indian banks will like to wait and watch before revising lending rates, even as some of their bigger peers reduced rates in the last few days.

"The bigger ones have done it, but others have not done it yet," said Prakash P Mallya, chairman and managing director of the state-run Vijaya Bank. He added that it would take a view after some of the medium sized banks have revised their rates.

Though on Wednesday four state-run banks, including the country's biggest lender, State Bank of India (SBI), revised their prime lending rates.

SBI and Canara Bank have cut rates by 25 basis points each, while Bank of India and Union Bank of India slashed rates by 50 basis points each.

"We have not taken any decision as yet," said V. Santhana Raman, executive director, Bank of Baroda, saying more so some bigger banks such as Punjab National Bank is yet to decide on the revision of rates.

Chairman Ananthakrishna told, private lender Karnataka Bank plans to keep all rates unchanged for some more days.

He added "We will wait and watch," it could review the rates in the first half of next month.

"We will take a decision in a week's time, maybe after the budget," said M. Venugopalan, chairman and CEO, Federal Bank.

He also added that there is not much liquidity available; however he acknowledged the rates are high after factoring in the deposit costs.

Commenting on whether there can be a rate cut he said, "We can’t be out of the market, we will be in line with the market".

M.S. Sundara Rajan, chairman of Indian Bank said "Our rates (PLR) are already competitive and there is no question of reducing it."