Citi cuts loan rates, others to follow

After public sector banks, foreign banks in India too joined the bandwagon of rate cuts on Thursday. While Citibank announced a 50-basis point reduction in its prime lending rate (PLR) to 15 per cent, Standard Chartered Bank and HSBC may take a call on their interest and deposit rates in the coming weeks.

Citibank is the first foreign bank in the country to reduce its PLR and, sources said, a similar cut could be expected in the bank’s home loan rates in the coming days.

While sources at HSBC said the bank was still examining the current situation, a senior executive at Standard Chartered Bank said, “We would not react to the situation immediately. We are evaluating the situation, and the cost of funds has to come down, before reducing the lending rates. Our new business volumes are comparatively higher than other banks.”

 

“We will observe the situation over the next two weeks before revising the PLR or what we call as mortgage variable reference rate. If lending rates come down, deposit rates too have to be reduced. Although the trend in the call money market looks comfortable now, there is still a lot of volatility,” added the executive.