No immediate plan to cut rates: Vijaya Bank

Bangalore-based public sector lender Vijaya Bank today said it has no immediate plans to cut interest rates even though the Reserve Bank of India (RBI) slashed the policy rates last Wednesday.

"As of now, we are not going to reduce the lending rates because of RBI's move" as the impact of key policy rate cuts has not impacted much the yield on government securities, Vijaya Bank Executive Director S C Kalia told reporters here today.

The RBI on Wednesday cut its short-term lending and borrowing rates by 50 basis points each.

After the Reserve Bank's announcement of a 50 basis points cut each in repo (rate at which RBI lends to banks) and reverse repo rates (rate at which RBI borrows from banks), the impact on yield of government securities was not that much compared to that when RBI earlier cut the rates, Kalia said.

When the yields on government bonds are attractive, banks prefer to park their money on bonds instead of resorting to commercial lending.

He said that presently the yield level on new 10 years government securities is 6.1 per cent and 6.4 per cent on old securities.