Depositors will feel the impact of the repo rate cut soon even though lenders may not see their loan rates going down.

The asset-liability committees (Alco) of most of the commerical banks will meet during the week to take stock of the situation arising out of the 50 basis points cut in repo rate. Most of the banks will cut their deposit rates.

Also Read RBI reduces repo rate by 0.5%

However, lending rates may remain untouched for the time being. State Bank of India chairman A K Purwar told Business Standard that his bank would re-price its liabilities.

"We have recently brought down the lending rates. Now there will be a need to realign the deposit rates. The soft interest bias will continue," he said.

Says Bank of Baroda chairman P S Shenoy: "There is a case for deposit rate cut. The cut can be about 50 basis points in the longer end and 25 basis points at the shorter end. The final decision will be taken by the bank's Alco. The lending rates are already low. Moreover, a large section of the borrower is raising money at below the prime lending rates of banks."

State Bank, Bank of India and other state run banks too are holding Alco meetings to take a look at the deposit rates during the week. Most of the banks are now offering 5.75-6 per cent rates for long term deposits. This can be brought down to around 5.25-5.50 per cent. At the shorter end, the rates can come down to as low as 3.75 per cent -- just about 25 basis points higher than the administered savings bank deposit rate of 3.5 per cent.

The 10-year benchmark gilt yield is expected to come down to around 5.25 per cent while the yield on 91-day treasury bill and 364-day treasury bill may come down to around 4.65 per cent, from 5 per cent and 4.98 per cent "This will have a cascading effect and we will realign the deposit rates," said a bank chairman.

Over the last three years, since the beginning of the low interest rate regime, banks have brought down their deposit rates more sharply than their lending rates.