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‘Banks morally bound to reduce lending rates’
Chennai: Even though the general feeling is that the commercial banks are now morally bound to reduce their lending rates following the Reserve Bank of India’s (RBI) decision to cut its key lending rates, it may not happen soon, say industry experts.
“The banks are now morally bound to reduce their lending rates. Only then other lending organisations — housing finance, non-banking finance companies (NBFC) — would be able to cut their rates,” a top official of a housing finance company told media preferring anonymity.
“The National Housing Bank (NHB), the refinancing agency for housing finance companies, too has raised funds from market borrowing. So unless its own borrowing rates come down, NHB may not be able to pass on the benefit,” he added.
However, the bankers are non-committal on cutting their lending rates.
Welcoming the RBI’s decision to cut its key lending rates by 25 basis points, SBI chairman Arundhati Bhattacharya said: “Our bank will take an appropriate call of a cut in base rate by looking at all evolving circumstances.”
In January 2015, when RBI cut its rates for the first time this year, banks did not reduce their base rates.
Getting some positive cues from the national budget tabled last week, and sensing an economic recovery, the RBI cut the repurchase (repo) rate has been cut to 7.5 percent from 7.75 percent, while the reverse repo rate has been adjusted to 6.5 percent from 6.75 percent.
“Banks may not be in a position to announce rate cuts immediately. They will discuss the issue with their asset-liability committee and come at a decision,” Srinivas Acharya, managing director, Sundaram BNP Paribas Home Finance told IANS.
According to Abheek Barua, chief economist at HDFC Bank, the central bank presumably took comfort from an improvement in the quality of government spending that the 2015-16 budget unveiled and the soft consumer price index print for January.
He pointed out that the cash reserve ratio (CRR) and the statutory liquidity ratio (SLR) were kept unchanged at four percent and 21.5 percent respectively.
This retention of CRR and SLR rates will not release any additional funds into the financial system.
Barua said Wednesday’s move is the second rate cut by the central bank outside the policy review (after a rate cut on 15 January 2015) .
“While the rate action is appropriate, we aren’t quite convinced of the merits of its timing,” Barua said.
He said the shift in the central bank’s strategy to make out of turn rate cuts something of a habit is likely to increase market volatility instead of anchoring it.
“The out of policy move, in our view, highlights a sense of urgency that can only be associated with the RBI realizing that it could in fact be ‘behind the curve’ in terms of monetary policy action,” he said.
According to him there is a prospect of another three repo rate cuts (75 bps) over the remainder of calendar year 2015 instead of our earlier view of another two cuts (50 bps).
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Dr. Abhishek Verma Dedicates a Shelter in Memory of His Mother, Veena Verma, at KGMU; Inaugurated by Daughter Nicolle Verma
World-renowned business tycoon Dr. Abhishek Verma has supported Foodman Vishal Singh’s Hunger-Free World mission. In memory of his mother, Late Veena Verma, who was a 3 term Rajya Sabha MP.
Dr. Verma dedicated a state-of-the-art free permanent shelter for the attendants of patients at KGMU Medical University, Lucknow, under the aegis of Vijay Shree Foundation. His daughter, Nicolle Verma, inaugurated the shelter.
During the event, Foodman Vishal Singh honored Nicolle Verma by presenting her with a memento. Mrs. Nidhi Sharma and Avantika Yadav, associated with the organization, welcomed her with garlands. Following this, Nicolle Verma distributed essential items to the attendants and also handed out fruits. She became emotional remembering her grandmother on her birth anniversary.
On this occasion, she also inaugurated the “Veena Verma Sevalaya” in memory of her grandmother, Veena Verma, to serve the attendants. She expressed, “I feel proud that my family is engaged in nation-building as well as social service. Today, in collaboration with Vijay Shree Foundation founder Foodman Vishal Singh Ji, I feel immensely proud to dedicate this shelter for the poor, helpless, and needy attendants of patients battling serious illnesses like cancer. I am honored to be associated with the Hunger-Free World Mission for humanity.”
Inspired by the continuous humanitarian service provided by Vijay Shree Foundation over the past 17 years, Nicolle Verma donated 10 lakh rupees to support the cause. The purpose of this donation is to ensure that services continue for the needy attendants of patients suffering from severe illnesses in hospitals, as facilitated by Foodman Vishal Singh.
It is noteworthy that Dr. Abhishek Verma’s family has a legacy of public and philanthropic service. They are helping millions to carry forward the values and service work of their parents. On the occasion of his mother’s birth anniversary, Dr. Abhishek Verma dedicated this state-of-the-art permanent shelter at Lucknow Medical College to serve the attendants of patients through the Vijay Shree Foundation.
Supporting Foodman Vishal Singh’s Hunger-Free World mission, Dr. Abhishek Verma assured that he would continually support keeping this flame of humanity alive. He also promised to assist in providing medicines to the helpless patients.
Continuing her grandmother’s legacy of service, Nicolle Verma personally served food to the needy patients and attendants. She said, “It is our good fortune to have received the joy of doing this noble work today through Foodman Vishal Singh. I have taken another step forward in carrying my family’s values and cooperation by joining hands with the Vijay Shree Foundation. My father taught me to serve and help the needy, and I feel happy when I bring a smile to someone’s face.”
On the birth anniversary of the late Veena Verma, the event organizer, Vijay Shree Foundation founder Foodman Vishal Singh, said, “We feel proud and happy that Dr. Abhishek Verma, a globally renowned business tycoon, has extended his support to uplift our country from the hunger index. Today, on his mother’s birth anniversary, he inaugurated a state-of-the-art permanent shelter at Lucknow Medical College, which will always be helpful for the needy attendants of patients. It is a pleasure for me and the organization to receive the affection of Mr. Verma.”
The event was attended by General Manager Verma Family Office Hemant Garg, Sonu Rajput, and the organization’s volunteers, including Sandeep Singh, Parmeshwar Ji, Prashant Rao Gautam, Balram Singh, Ramesh Chaudhary, Suman, Jeetu, Anil, Suraj, Vinay, Manish Bhadauria, Manas Mehrotra, Vivek, Apurv, Happy, and others.
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