Rate cuts
usually point to a larger change in the overall banking and financial outlook
of a country. The Reserve Bank of India (RBI), after sticking to its guns to
not alter repo rates, has finally done so, twice! As a consequence, consumers
can expect real changes in borrowing and lending rates in the coming weeks and
months. And, according to industry experts, the latest rate cut by RBI may not
be the last one this year.
Response by different banks
Banks have been
slow in reflecting the rate cuts as declared by the RBI. As of 3rd
March 2015, only 3 out of 47 registered lenders in the country had declared
cuts in their base rates, weeks after the first rate cut was announced by the
apex bank. The banks have stuck to the line that the policy rate cuts have not
resulted in a decrease in cost of funds for them, and so they have been
hesitant to cut lending rates.