Indian banks likely to cut lending rates by 50 basis points by next year: Bank of America

Source: Xinhua| 2019-02-22 12:22:30|Editor: ZX
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MUMBAI, Feb. 22 (Xinhua) -- Indian banks are likely to cut lending rates by 50 basis points by March 2020 following the capital infusion by the finance ministry of 6.8 billion US dollars, said a report by Bank of America Merrill Lynch.

"On our part, we expect banks to cut lending rates by 50 basic points by March 2020 reversing the 30bp hike in 2018," said the report issued in Mumbai by Bank of America Merrill Lynch, the global banking and markets division of Bank of America Corp, second biggest U.S. lender and also the world's second rank bank by market capitalization.

"Second, we expect the RBI Monetary Policy Committee to cut another 25 basis point rate cut on April 4 with February inflation tracking a lowly 2.5 percent," the report said.

Lack of capital adequacy in Indian banks coupled with Prompt Corrective Action by the country's Central Bank had led to lending restrictions along with tight liquidity, forcing the small and medium enterprises to opt for high cost loans from non-banking financial companies.