The country’s largest public bank, State Bank Of India (SBI) currently does not have any headroom to cut deposit rates.
Indian banks value their benchmark credit rates, known as MCLR, mainly based on the cost of deposits.
According to SBI chairman, the headroom to cut the prices for deposits for SBI does not exist as on date.
The country’s largest public bank, State Bank Of India (SBI) currently does not have any headroom to cut deposit rates. Thus it cannot reduce its base lending rate, said SBI Chairman Rajnish Kumar on Monday.
Indian banks value their benchmark credit rates, known as MCLR, mainly based on the cost of deposits. According to Kumar, The issue is that they need to cut the rate on the deposit if they need to reduce the MCLR. He further added that it’s not possible as other banks are currently offering higher interest rates on deposits.
These would also need to get slashed first for SBI to give a reaction. According to SBI chairman, the headroom to cut the prices for deposits for SBI does not exist as on date.