India Banks May Cut Lending Rates

The subdued consumption in India is likely to get a boost next month with big banks including the State Bank of India expected to cut lending rates. Since November 8, when the government banned high currency notes of Rs 500 and Rs 1,000, consumption had dropped due to shortage in money in hands of consumers, MoneyControl reported. Banks are expected to cut rates with an increase in liquidity in the economy. Old currencies deposited with banks have pushed up the liquidity. The large banks are exploring the possibility of a rate cut and met with the finance ministry last week to discuss the same. However, cash withdrawal limit is likely to remain the same even after deposit deadline of December 30 for old notes. Bankers believe that a rate cut could boost consumption and improve sentiment that has been down since demonetization.