ICICI Bank on Thursday cut its lending rates for home, auto and other retail loans by half a percentage point to 12.75 per cent, but its CEO Chanda Kochhar said any further cuts were least likely till Diwali.
"The cost of deposits has come down and, therefore, we decided to pass on the benefit to our customers... this time even without lowering our deposit rates...Since January our lending rates have been lowered by 150 basis points," Kochhar told PTI days before the bankers' meeting convened by Finance Minister Pranab Mukherjee, who has sought a benign plan of action to cut interest costs.
Asked about her earlier prediction that interest rate could come to single digit during the current fiscal, ICICI Bank's MD and CEO said: "It's unlikely. The cost of deposits are not coming down as much and then there is the government borrowing from the market."
She said that there were least chances of interest rates further going down in the next few months. "I would think so," Kochhar said when asked if rates would remain near the current levels till Diwali.
Earlier in the day, the biggest private sector lender announced lowering its floating reference rate, applicable to floating-rate retail loans including for home purchase, from 13.25 per cent to 12.75 per cent, with effect from Friday.
The bank also announced an identical reduction of 50 basis points in its benchmark advance rate (I-BAR) to 15.75 per cent effective from Friday. "PSU banks have been talking about it (cut in interest rates) for quite some time actually. I have been watching only my cost of funds. I thought our cost of funds have come down and it is time to pass on the benefits to (loan) customers," Kochhar said on the rate cut.
Asked if she was worried over SBI overtaking all the other banks in the retail loan segment, Kochhar said: "I am not here to really run a race frankly. I am here to stay on course that I have charted out in the beginning of the year. To say that we have been large lender. Our book is very big."
"What we are looking at is how to optimise on the deposit structure and asset structure of our book first rather than running the race. I am okay, absolutely happy with the strategy that we are following," she added.
