Reduction in MCLR not possible without bank deposit rates cut: SBI

Further reduction in Marginal Cost of Funds-based Lending Rate (MCLR) is not possible if the banks are unable to cut down their deposit rates, said State Bank of India's Managing Director Rajnish Kumar.

"MCLR is depended mostly on the deposits, and we have always maintained that most of the banks in India are depended on retail deposits -- and not on the wholesale front," Kumar told BTVi in an interview.

"So under these circumstances, if we are able to cut the deposit rates, only then further cut in MCLR is possible, otherwise not."

The country's central bank on Wednesday kept key lending rates unchanged in its sixth and final monetary policy review for the 2016-17 fiscal, shifting its monetary policy stance from accommodative to neutral, citing inflationary fears and global uncertainties.

Kumar expressed concern that with no cuts in lending rates, there could be an impact on the treasury earnings of the banks in the long term.

"If the rate cuts would have happened, then treasury gains would have been there. This year has been good for most of the banks as far as treasury gains are concerned," Kumar said.

"But yes, going forward to the extent the yields have moved up, so there will be some impact on the treasury."

--IANS

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