'Banks may cut PLR further if RBI takes action'

MUMBAI: With inflation declining and fiscal discipline improving in the system, the Reserve Bank might reduce its cash reserve ratio and repo rates further enabling banks to lower their lending, deposit rates further, bankers said.
"If the low inflation sustains for a period of two to three weeks, the Reserve Bank might reduce CRR and repo rates further...this may give room to banks to cut their interest rates again," leading public sector lender, Bank of India's Chairman and Managing Director, T S Narayanasami told in Mumbai.
India's wholesale price index rate fell sharply to 8.98% for the week ended November 1 on account of declining prices of fuel and manufactured goods after rising close to 13% in the recent past.
To deal with difficult liquidity situation, the RBI slashed cash reserve ratio three times to 5.5% from 9%, statutory liquidity ratio by one per cent to 24% and short-term repo rate twice to 7.5% from 9%.
Through the mix of monetary and fiscal steps, the RBI and Government have infused over Rs 2.5 lakh crore into the banking system to ease the liquidity shortage and to improve credit availability particularly to the needy sectors.
CRR is the percentage of amount banks are required to keep with the central bank. Repo is the rate at which the apex bank lends short term funds to banks. SLR is the amount banks are required to park with the regulator in the form of cash, gold or approved securities.