January 5th, 2009 
Tushar Mathur
According to US-based Merrill Lynch report Indian banks are expected to reduce their Prime Lending Rates by another 75 basis points by March to support growth.
The report stated, “We expect banks to cut their PLR by 75 basis points by March and another 75 basis points in the first half of 2009-10″.
Regarding the policy rate cut, in the report it was stated that the Reserve Bank is expected to cut rates by about 50 basis points.
The report also stated the Cash Reserve Ratio, the amount of deposits banks need to keep with the RBI, is likely to be cut down next month while Statutory Liquidity Ratio is likely to be slashed by 100 basis points by March 2009.
At present, PLR of most of the public sector banks is in between 12.5 per cent and 13 per cent.
As per report the banks have also witnessed slowdown in industrial credit demand in the past few weeks.
The report said however, the slower growth, credit off take is expected to slow to 22 per cent in the current fiscal and about 15 per cent in the next fiscal.
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