The Central Bank has also injected substantial rupee liquidity to the domestic market by reducing the Statutory Reserve Ratio (SRR). It has also further reduced the policy interest rates by 50 basis points on 31 May 2019 which is directly reflected in the corresponding reduction in SDFR-linked interest rates of savings deposits.
Commencing 01 July 2019, the Central Bank further revised the reference rates applicable on deposits of banks and NBFIs for the 03rd quarter of 2019, and the maximum interest rates that can be offered on savings and fixed deposits have reduced further by 50 basis points and 171 basis points, respectively, thereby reducing the cost of funds of banks and NBFIs. The Average Weighted Prime Lending Rate of licensed commercial banks has also reduced by 127 basis points from 12.24% as at 26 April 2019 to 10.97% as at 12 July 2019.
Accordingly, the Central Bank expects lending rates of banks and NBFIs to reduce further in the immediate future, and borrowers, particularly SMEs, can expect to obtain credit facilities at reduced interest rates from banks and NBFIs. The Central Bank will closely monitor the behaviour of bank interest rates and take further measures as appropriate in future to support economic growth given well contained inflationary pressures.