CRR cut draws mixed reactions from Banks

Author: Neha Dhamija

With yet another addition to the series of cuts in CRR (Cash Reserve Ratio) by RBI, after a total decrease of 2.5 percentage points in the last couple of days, the current CRR stands at 6.5%. Banks have shown mixed reactions as to whether this will cause a drop in their lending rates or not. While some were fast to act, others want the air to clearer before stepping forward.

PNB (Punjab National Bank) has declared that the education, home and auto loans it grants can now be availed at 50 basis points lesser than earlier. The change is applicable for both the new auto loans as well as the existing ones. The Bank is undecided regarding the corporate loans, as informed by J M Garg, Executive Director of PNB.
	However, some banks like HDFC and Standard Chartered are firm on not adopting any such measures. Keki Mistry, the Managing Director and Vice Chairman of HDFC is of the view that because they did not let the hike in cost of resources trouble customers, they better not think of availing any benefits of less borrowing costs. ICICI opined that only after evaluating the cost of funds can it decide on this issue. Bank of Baroda wishes to watch the situation carefully and then act. Kolkata -headquartered Uco Bank’s S C Goyal also denied any plans of cuts in lending rates.