Lending to Take a Boast, as Banks Cut Rates

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The Banks in India have started reducing their Base Rates. With cheaper Loans there will be an upward trend in lending. The cut in the Benchmark Base Rates will act as a Boaster to the Economy. Several Banks have announced rate cuts from 30 to 90 point basis and others may soon follow.

After Demonetization, resulting in the deposit of old Rs.500/- & Rs.1000/- currency notes and restriction on withdrawals/ encouraging cashless transactions, Banks have surplus funds to attract cheap lending.

Immediate effect shall be cheaper housing and car loans. Thereafter medium term economic strengthening is likely to start with the pumping of more funds to the industry at cheaper rates. Measures to strengthen the SME sector may also help boast production and consumption of SME products.

Industry Circles like CII and FICCI have welcomes the move of such rate cuts and have hoped that the move of such rate cut regime shall continue.

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