Shares in State Bank of India, India's biggest lender, rose 1.8 per cent after the bank slashed its deposit rates between 50-100 basis points across maturities, effective Friday.
Morgan Stanley, however, says SBI's move is more of a manifestation of a slowing economy with RBI data also showing loan growth for the system for April to August has been close to zero - similar to the 2008 levels.
Morgan Stanley further warned that reduced growth in segments facing slowdown will accelerate restructured loans creation.
But bond market dealers say SBI rate cut is a game changer and put RBI way behind the curve.
Most economists polled expect RBI to hold rates when it meets on September 17 for monetary policy.
Copyright Thomson Reuters 2012
Morgan Stanley, however, says SBI's move is more of a manifestation of a slowing economy with RBI data also showing loan growth for the system for April to August has been close to zero - similar to the 2008 levels.
Morgan Stanley further warned that reduced growth in segments facing slowdown will accelerate restructured loans creation.
But bond market dealers say SBI rate cut is a game changer and put RBI way behind the curve.
Most economists polled expect RBI to hold rates when it meets on September 17 for monetary policy.
Copyright Thomson Reuters 2012
