Given the Reserve Bank's "dovish" policy move, banks are expected to cut lending rates by 25 basis points, which in turn is expected to push up credit offtake, says a report.

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According to Bank of America Merrill Lynch (BofAML), the global financial services major, a reduction in lending rates by 25 bps before the busy season starts in October is likely to give loan demand a leg-up.

"On balance, we second Governor Urjit Patel's view that banks should cut lending rates by 25 bps before the industrial 'busy' season starts in October," BofAML said in a research note.

RBI's August monetary policy sends rupee to a two-year high
  • RBI cuts repo rate by 25 basis points; lowest since 2010