New Delhi, March 27: Punjab National Bank, the
country`s second largest state-run lender, on Friday said there is
no further scope for the banks to slash their lending rates.
"I do not see interest rate coming down in the recent
scenario. If it does, it would be marginally. There is always
a scope for it (cutting interest rate) but there is not that
much scope now," PNB CMD K C Chakrabarthy told reporters here.
Indian Banks` Association (IBA) Chairman T S Narayanasami
had also said yesterday that there is no more headroom for
banks to cut their prime lending rates (PLR) and deposit rates
in the near future.
When asked if the government`s borrowing might lead to
low interest rate regime, Chakrabarthy said, "Interest rate
will come down not on borrowing programme. It will come down
based on what is inflation rate, what is expected inflation
rates and cost of resources."
Interest rates will come down provided banks are able to
reduce their cost of deposits, he added.
Yesterday, the government said that it will borrow an
additional Rs 1,40,000 crore during the first half of fiscal
2009-10 to fund increasing public expenditure.
Bureau Report
