SBI up on deposit rate cut; M.Stanley unimpressed

Last Updated: Thu, Sep 06, 2012 10:20 hrs

Shares in State Bank of India , India's biggest lender, rose 1.8 percent 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 warns 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.

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