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Immediately after the announcement of RBI's cut of key rates, India's largest private sector lender ICICI Bank reduced its interest rates. The Reserve Bank of India (RBI) lowered the repo rate and reverse by 25 basis point each. The repo rate or the short-term lending rate has been brought down to 4.75 percent while the reverse repo rate or the borrowing has been reduced to 3.25 percent.
The recent move by the central bank of India has allowed ICICI Bank to cut both lending and deposit rates by up to 50 basis points. According to K V Kamath, the managing director & CEO of ICICI Bank, the initiative by RBI is very innovative and will have far-reaching impact in the face of global economic slow down. He stated that RBI's stance will push economic growth in the country.
While introducing the cuts in key rates RBI informed that country's economic growth will slow down to around 6 percent in the current fiscal year. The central bank also stated that it will be a big challenge to manage large government borrowing in 2009/10 in a smooth manner. RBI is expected to use a mix of monetary and debt management tools to tackle the upcoming problem. Meanwhile, housing loan major HDFC has not given any clear verdict on cutting the rates. HDFC's Chairman Deepak Parekh informed that currently there is no such plan to reduce interest rates.
