Mumbai:

If indications from leading banks such as State Bank of India (SBI), Bank of Baroda (BoB) and Corporation Bank are anything to go by, most banks will be resorting to a cut in prime-lending rates and deposit rates shortly.

SBI chairman A K Purwar says his bank's asset liability committee will be meeting shortly to take a decision. "The RBI's policy measures will put a lot of pressure on banks to reduce transaction costs and improve productivity. This will be the new challenge for the banks."

BoB chairman and managing director P S Shenoy says his bank will take a decision in a couple of days. "The industry should be responding to the RBI's signal and BoB will not be out of it."

Says Corporation Bank chairman K Cherian Varghese: "Reduction in the bank rate and CRR [cash reserve ratio] by 25 basis points is an indication towards a softer interest rate regime, enabling availability of credit at lower interest rates. The bank's asset liability committee will meet to fine-tune deposit and lending rates."

Dalbir Singh, chairman, Central Bank of India, and chairman, Indian Banks' Association, however, feels a reduction in the bank rate need not result in a corresponding cut in rates by all banks immediately. "It is for each bank to decide depending on their cost of funds. On the whole the monetary policy is a prescription for taking a step forward towards integrating Indian banking with global financial markets."