February 13, 2009 / 6:27 AM / 9 years ago

PNB expects RBI to cut rates further - CMD

NEW DELHI (Reuters) - State-run Punjab National Bank expects the central bank to further cut rates as inflation moderates, its chairman said Friday, in order to push banks to cut their own lending rates.

A policeman stands guard at the entrance of the headquarters of the Reserve Bank of India in Mumbai January 27, 2009. State-run Punjab National Bank expects the central bank to further cut rates as inflation moderates, its chairman said Friday, in order to push banks to cut their own lending rates. REUTERS/Arko Datta

“It will happen as and when inflation will come down,” K.C. Chakrabarty told Reuters on the sidelines of a conference.

“The Reserve Bank is giving continuous signals that interest rates should come down. But banks are not responding,” he said.

“If banks are not responding, the Reserve Bank will further cut it (rates) and compel the banks to cut rates.”

The Reserve Bank of India has cut its key lending rate by 350 basis points since October to a 8-½ year low of 5.5 percent, but banks have passed on very little of this reduction to customers.

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