More Cut Of The Lending Rate Possible : Puri

According the Story of ET; Even though the RBI left the policy rates unchanged at the last policy meet citing upside risks to inflation, borrowers can expect lower rates going forward with second largest private lender HDFC BankBSE 3.75 % Friday saying there is more room for banks to lower lending rates. "Even though the RBI adopted a neutral stance, there is further room for lenders to cut rates. It depends on inflation and liquidity, cutting of rates by the central bank does not automatically mean transmission by banks," Managing Director and Chief Executive of HDFC Bank Aditya Puri told the Nasscom summit here. Explaining delays in transmission, he said asset pricing is based on the pricing of liabilities of the banks. "If I don't reduce my deposit rates, I cannot cut my lending rates. The MCLR is calculated on the basis I cut my deposit rates. I am obligated to cut my lending rates if my deposit rates fall. "This is because our banking system only borrows 3 per cent from the market, while 97 per cent of their funds come from deposits," Puri said. When there is surplus liquidity, whether somebody (the regulator) cuts rates or not, the banks will cut rates themselves, he added.