PTI

Mumbai, Dec 6: With the Reserve Bank cutting both its repo and reverse repo rates by 1 per cent, bankers have said interest rates across the spectrum would fall and that liquidity and inflation were no longer as great a concern to the apex bank as they were a few months ago.

"Today's rate cuts indicate very strongly the RBI's concern to bring down interest rates. Liquidity is not an issue--it has been taken care of through the earlier measures," IDBI Bank Chairman and Managing Director Yogesh Agarwal said here on Saturday.

Overnight call rates would definitely come down, he said, adding that "in a little while, both deposit and lending rates should also come down."

Yes Bank Managing Director & CEO Rana Kapoor said that with the reverse repo at 5 per cent, overnight call rates were expected to decline by at least 1 per cent to around 5.5 per cent.

"Ten-year bond yields, which closed at 6.75 per cent yesterday should also come down in the range of 5.75-6 per cent by end-March," Kapoor said.

Inflation was no longer a concern as it was headed southwards and "hence, there is a scope for further rate cuts going forward," he said.

Public sector Dena Bank's Chief, P L Gairola, said that the RBI rate cuts were expected and that the apex bank "has sent a strong signal for interest rates to soften."

"It is a signal that money should become less costly. Deposit rates should decline in the coming days," he said.

On whether banks would reduce their prime lending rates (PLRs), IDBI Bank's Agarwal said that many banks had already cut their PLRs by 0.75 per cent about 2-3-weeks ago, and hence "it might not be warranted immediately."

Banks had cut their PLRs in anticipation of the RBI cutting its key rates, he said, adding that "today's cuts will definitely address the concerns of banks who had already cut their PLRs."

HDFC Bank's Deputy Treasurer, Ashish Parthasarathy, said that he expected a 1 per cent decline in deposit rates over the next one-month.

"A 1 per cent cut in deposit rates over the next one-month looks very likely," he said.

On lending rates, he said that they too should fall but he would not set a time-frame for it. "It would depend on many factors," he said.

"From what the RBI has indicated today, it seems that inflation and liquidity are not as great a concern as they were sometime back," he said.