Andhra Bank has withdrawn its proposal to revise interest rates with the Reserve Bank announcing liquidity-tightening measures on Monday.
The move comes within hours of the bank’s announcement of a revision in rates. According to analysts, more banks are expected to withdraw their rate cut plans.
“Andhra Bank does not propose to revise the interest rates consequent to the measures taken by the Reserve Bank of India (RBI) to prevent the rupee volatility in the foreign exchange market. RBI measures are intended to arrest speculation in the Re/$ rate and the bank believes that the measures taken will bring stability in the short-run,” the bank said in a statement on Tuesday.
Andhra Bank, on Tuesday, had first approved a revision of base rate by 25 basis points (bps) from 10.25 per cent to 10 per cent with effect from July 22. In line with reduction in the base rate, BMPLR was also expected to be revised by 25 bps from 14.50 per cent to 14.25 per cent with effect from July 22. However, this revision stands cancelled now.
The RBI on Monday announced a slew of measures, including increase in the cost of borrowing by banks by 2 per cent to 10.25 per cent and sale of bonds worth Rs 12,000 crore through open market operations, to suck liquidity.The rupee had earlier touched a life-time low of 61.21 to a dollar. On Tuesday, RBI’s measures strengthened the rupee to 59.20 against dollar in noon trade.