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EMIs to fall as banks ready to cut interest rates after RBI's surpise move

Jan 15, 2015 01:25 PM IST Business Business
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New Delhi: Soon your EMIs are going to come down with several banks going ahead with a reduction in their interest rates after the Reserve Bank of India itself cut rates in a surprise inter-meeting move on Thursday.

United Bank of India on Thursday said it would cut its base rate by 25 basis points to 10 per cent from February 1, after the Reserve Bank of India itself cut rates in a surprise inter-meeting move. Shares in United Bank extended gains to 4.2 per cent after the announcement.

State Bank of India chairperson Arundhati Bhattacharya said that a cut in lending rates can be expected in coming days. "The board will take a call on time frame of lending rate. The cut may see certain pressure on margins in Q4 non-performing liabilities. The pressures are not completely eased. It will take another two quarters before credit offtake picks up." said the bank chief.

India's largest private sector bank ICICI Bank MD and CEO Chanda Kochhar called RBI's move a "welcomed step that everybody was waiting for".

Acting ahead of a scheduled monetary policy meeting on February 3 and the government's annual budget statement late next month, RBI surprised markets by lowering the repo rate, its key lending rate, to 7.75 per cent from 8.0 per cent, where it had been for the past one year.

Finance Minister Arun Jaitley also welcomed RBI's rate cut saying it will help revive capital investments in Asia's third-largest economy.

Commerce Minister Nirmala Sitharaman, too, welcomed RBI rate cut. "Several steps have been taken to reign in inflation, economy is responding to the steps the government undertook. It is high time to bring down cost of capital. Rate cut has come at a time when government is preparing for Budget 2015. Government will take several measures to boost manufacturing." said the Cabinet minister.