Economic Times
 
Mumbai, Jan 3: Home loan and corporate borrowers have something to cheer about early in the year. Interest rates on home and other loans, particularly for Tax deduction on home loan

corporates, are set to fall soon. The Reserve Bank of India (RBI) has cut its key policy rate by one percentage point, signalling a reduction in banks’ lending rate.

This time, banks that many corporates still see as reluctant to lend, have reacted swiftly. Union Bank of India was the first to announce a 25-75 basis point cut in deposit rates across maturities on Friday night.

Allahabad Bank too announced that it would cut its prime lending rate by 75 basis points to 12.5%. Other banks are expected to follow suit over the next few days, after they have reduced their deposit rates.

Private banks, however, may wait a while before they decide to cut rates, according to officials in these banks.

The consensus among bankers is that at best, interest rates could go down by 50-100 basis points. A further cut in lending rates will make cheaper credit available to borrowers and boost demand.