ICICI Bank on Thursday slashed its lending rates for home, auto and other retail loans by half a percentage point to 12.75 per cent, even as the SBI hinted at a cut of 25 basis points. ICICI, the biggest private sector lender has lowered its floating reference rate, applicable to floating-rate retail loans including for home purchase, from 13.25 per cent to 12.75 per cent, with effect from June 5.
The bank announced an identical reduction of 50 basis points in its benchmark advance rate (I-BAR) to 15.75 per cent effective from June 5. Speaking to reporters, the SBI chairman, Mr O.P. Bhatt, said, “One important thing is that inflation continues to be below one per cent. There is room (for SBI) to cut rates by 0.25 per cent on both sides (lending and deposit).”
“While improving fiscal and economic conditions are likely to lead to further reduction in interest rates in the coming months, time and quantum of rate of reductions can vary from bank to bank,” he said. The ICICI Bank MD and CEO, Ms Chanda Kochar, ruled out any further cuts at least till Diwali.
Asked about her earlier prediction that interest rate could come to single digit during the current fiscal, Ms Kochar said: “It’s unlikely. The cost of deposits are not coming down as much and the government is also borrowing from the market.”
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