According to State-owned Bank of India, banks will wait till the next bi-monthly monetary policy review of the RBI on April 7 before cutting interest rates, said the media report.
"Coming April after seeing RBI monetary policy statement, banks can start considering reduction in the rate... We can reduce anywhere from 10 basis points to 25 basis points," Bank of India chairman V R Iyer said after a meeting between finance minister Arun Jaitley and heads of PSU banks.
The Reserve Bank has lowered interest rates by 0.50 percent since January 2015, but banks are yet to pass on the benefit of rate cut to borrowers.
"The transmission will definitely take place... Banks also have to keep asset quality in mind (before passing on the benefit of rate cut). That is a guiding factor for any bank to reduce lending rate," Iyer said.
The RBI is scheduled to announce its bi-monthly policy review on April 7. In the meeting, the finance minister and officials from the finance ministry discussed the possibility of interest rate cut by banks.