State-run banks to cut rates by 100-150 bps

 Government-owned banks plan to cut lending rates by 100-150 basis points — one basis point is one hundredth of a percentage point within the next fortnight, after a finance ministry directive to lower interest rates in line with falling cost of funds. The rate cut is expected before June 12, when the finance minister is scheduled to meet the chiefs of public sector banks.



Punjab National Bank (PNB), which already has the lowest lending rates in the country, will not cut rates but will provide the benchmark for other public sector banks.



Officials at State Bank of India (SBI), Bank of Maharashtra, Uco Bank, Corporation Bank and Bank of Rajasthan confirmed the development. Corporation Bank chairman JM Garg said as the cost of funds is falling, lending rates will be cut accordingly. “...the trends in interest rates have been moving downward. We have to cut the interest rates further,” said Mr Garg.



And banks like Uco might go for a sharp rate cut, which could be in the range of 100-150 basis points. According to Uco Bank chairman and managing director SK Goel, the prime lending rate (against which rates to individual borrowers are benchmarked, depending on their creditworthiness in relation to those who qualify for prime rates) will be cut to 8% from 12% over the next six months, if conditions remain favourable. “We have been cutting interest rates and expect further cuts in the coming weeks "Mr. Goel"