Voicing surprise over the banking regulator’s move on the 25-basis-point repo rate cut, the Managing Director and Chief Executive of Karur Vysya Bank K Venkataraman said “coming as it does at a time when rate yields had started moving up was a pleasant surprise.”

“In hindsight, I did think that a rate cut before long could be in the offing, as the earlier one (in mid-January this year) was just 0.25 per cent. A 50-bps-cut would have made an impact,” he said.

He, however, did not fail to point out that this co-ordinated action by the RBI within a week of the Union Budget announcement would help spur growth.

“It is an unexpected pleasant surprise,” said N Kamakodi, Chief Executive, City Union Bank. According to Kamakodi, this signal would speed up the rate reduction cycle.

However, Venkataraman said that one major trigger to drive growth could be improvement in public spending rather than a cut in the rate. “Once this happens, private investments would follow and the demand in turn would pick up,” he said.

KVB has only recently effected a cut in the rate. “We will assess the situation and take a call nevertheless if there is further scope for a cut in interest rate,” Venkataraman said.

CUB, on the other hand, is closely monitoring the cost, Kamakodi said, adding that “rate cut should happen soon, most likely in the April – June quarter.”

When asked if the bank faced pressure from customers whenever the regulator made some announcement, KVB Chief said, “customers are not linking this rate cut for putting pressure on us to cut the lending rate”.

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