BANKERS HINT AT FURTHER LENDING RATE CUTS :Lower Home Loan Rates:The Govt. Move to nudge banks to clip rates.

NDIA’S state-owned banks, which have turned in impressive third-quarter results, may cut lending rates by another 2% over the next few weeks, senior bank officials hinted, after a meeting with finance minister Pranab Mukherjee on Monday.

Officials with State Bank of India, Punjab National Bank, Canara Bank, UCO Bank and Oriental Bank of Commerce have hinted at rate cuts, provided the cost of funds and inflation remained low. Finance secretary Arun Ramanathan too said lending rates may come down further as there has been a moderation in deposit rates.

Meanwhile, Mr Mukherjee said there was a need to stimulate growth in labour- and growth-intensive sectors, such as infrastructure, small and medium enterprises and real estate, to help the economy limit the impact of the global recession.

 “We must support the development of sectors, which will immediately boost growth and throw up employment opportunities. In view of contracting global demand, we have to focus on the development of domestic demand by stimulating demand in rural areas and in labour-intensive sectors,” he said, after his first meeting with PSU bank chief executives.

Mr Mukherjee met the bankers in the backdrop of the third-quarter review of the annual monetary policy of the country’s central bank, the Reserve Bank of India (RBI).

 RBI, in its third-quarter review, had said there was scope for further rate cuts by commercial banks. The central bank had said banks were not passing on the benefits of the steps taken by it to bring down interest rates.

    Following RBI’s suggestion, the country’s second-largest PSU bank, PNB, had reduced its benchmark lending rate by 50 basis points to 11.5% — the lowest among all banks. SBI, on the other hand, announced that it would provide housing loans at 8% for one year.

 SBI chairman OP Bhatt said the bank was discussing the possibility of a further rate cut. He, however, did not mention the quantum of the possible cuts.

 SBI had earlier reduced its benchmark lending rate by 75 bps to 12.25% with effect from January 1. Mr Bhatt said large and medium businesses could add up to its non-performing assets. PNB chairman KC Chakrabarty said the bank was open to reducing lending rates provided the cost of funds dips further. UCO Bank chairman SK Goel said there was scope for a100-200 bps reduction in lending rates.

REALTY CHECK

HOME BOUND
More banks may offer fixed loans at 8%

LESS TAXING
Service tax waiver for residential projects

STAYING LOW
Property prices to fall 20% in 3 months: DLF