IDBI Bank puts rate cut on hold

The first adverse impact the rising inflation has become visible. Industrial Development Bank of India (IDBI) has deferred its earlier decision to cut benchmark prime lending rate (PLR) by 50 basis points.

The Mumbai-based public sector bank had declared on March 26 about its intention to cut PLR by 50 bps, from 13.25 per cent to 12.75 per cent from April 1.

"Keeping in mind the rise in inflation and finance minister's statement to take all possible steps to contain price rise, we decided to put on hold our earlier decision to reduce PLR," IDBI Chairman and Managing Director Yogesh Agarwal said.

The revised date for implementing revision in key lending rate would be decided later, Agarwal said, adding the bank would monitor the market trend and the steps that the government took to arrest the spiralling prices.

Meanwhile, Kolkata-based Allahabad Bank, which was to cut PLR by 25 basis points to 13 per cent from April 1, said it would go ahead with the decision.

"I do not think, we will withdraw our decision (to reduce PLR)," Chairman and Managing Director A C Mahajan said.

Inflation shot up to a 13-month high of by 6.68 per cent on March 15. It was 5.11 per cent on March 1 and 5.92 per cent on March 8.