Rate cut puts squeeze on banks
Click here to read full article from source
New Delhi, May 25 -- Banks are staring at the unpleasant decision of reducing interest rates for millions of depositors already getting poor returns, as they try to protect margins while passing on the benefit of the Reserve Bank of India's (RBI's) latest repo rate cut to borrowers.
As deposits form a big chunk of banks' sources of funds, any lending rate cut is either followed or preceded by a similar cut in deposit rates. Moreover, if borrowers who are currently under moratorium ultimately fail to repay, lenders stand to lose as well. While Bank of Baroda (BoB) has 90% of its eligible borrowers utilizing the moratorium, the number is 20% in case of State Bank of India (SBI).
According to the chief executive of a mid-sized public secto...
To read the full article or to get the complete feed from this publication, please Contact Us