SBI Gets Rs. 1.26 Lakh Crore Cash In just 8 Days
SBI received cash deposits of Rs.1.26 lakh crore during November 10-17 November.
Cash deposits at banks are nub up in the wake of demonetization of currency notes. For India’s largest bank, State Bank of India (SBI), it has meant Rs. 1.26 lakh crore in cash deposits in only eight days, from 10 to 17 November.
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With the credit off take remaining weak, the impact of rising deposits is already noticeable on fixed deposit rates. SBI has this week cut fixed deposit rates by up to 50 basis points, depending on the maturity of deposit and type of deposit, bulk or retail.
And the next move could be a deduction in advance rates from India’s largest bank.
Depending on the cost of collection, there is every probability that rates may come down from December 1,” said by Rajnish Kumar, who is managing director-national banking at State Bank of India.
Also Mr kumar said that SBI’s asset responsibility management board will meet next week to decide on loan rates.
Private sector Axis Bank has already this week declared a cut in loan rate.
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There could be further take down of loan rates in the skyline as expectations build up for a rate cut from the Reserve Bank of India (RBI) in next month.
Sooner he was expecting a rate cut in February, said by Ashish Vaidya, who is head of trading at DBS Bank. “But now he expects a rate cut in December given that the demonetization move is financial and inflation positive.”
Temporary rates have also fall down, with mass deposit rates down by as much as 42 basis points, increase the view that the Reserve Bank of India may cut the repo rate in December, in place of earlier expectations for a cut in February or April.
The RBI, which has already moved down rates by 175 basis points since early last year, holds its next review on 7 December.
Global commission firm Credit Lyonnais Securities Asia (CLSA) expects three rate cuts from the RBI in next 12 months.
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Rajeev Malik, senior economist at CLSA, said that demonetization could have a deflationary impact on the Indian economy but it could make the way for more RBI rate cuts. He expects the central bank to cut repo rate three times in the next 12 months, also including in December.
People are underestimating as to how aggressive the RBI will be in cutting rates, Mr Malik said.
With bank deposits enlargement, analysts also expect banks to pass on the RBI rate cuts at a faster rate than the lenders have done in the past.
Next move could be a cut in lending rates from India’s largest bank State Bank of India (SBI).