While smaller Australian banks have passed on in full to customers the 25 basis points overnight cash rate approved by the Reserve Bank of Australia (RBA) on Tuesday, the four large banks are playing a waiting game which one will first pass on the rate reduction and by how much.

However, for each day that passes, the banks' coffers are growing. The Sydney Morning Herald quotes industry estimates that ANZ Bank, Commonwealth Bank, National Australia Bank and Westpac are earning $5.6 million more in pre-tax profit for each day that they do not pass the rate cut in full.

On an annual basis, that would reach $2 billion, which could benefit Australia's weakened retail industry in terms of consumer spending based on lower interest on their loans.

Two days after the RBA decision, not one of the banks have made public the result of their review of their interest rates, although the banks have indicated it might not pass on to consumers the full rate cut due to the rising cost of wholesale fund even if the banks have been relying more on deposits to shore up their finance.

"The banks are clearly sitting on their hands.... I think the longer it goes on the more you have to believe they're not going to pass along the rate cut in full," Mozon Managing Director Rohan Gamble told The Sydney Morning Herald.

That possibility was bolstered by a statement from the Australian Banker's Association (ABA).

"It's not going to be a surprise to the RBA should one of more banks decide not to pass along the full rate cut.... The RBA would have factored that into their decision," ABA Chief Executive Steven Munchenberg said.

So far, the Bank of Queensland and MEBank, as well as credit unions, have passed the full rate cut to customers.

To pressure the big four to pass the rate cut in full, Treasurer Wayne Swan recommended that Australians move their accounts to banks that pass the rate reduction in full.

"You could go down the road to the MEBank and get a loan for 6.74 per cent. You can go down the road to the Bank of Queensland and get a loan for around 6.5 per cent - and of course you could go to any number of credit unions and other financial institutions that are more competitive," Mr Swan said.

"You can get a better deal these days because our banking system is much more competitive than it was before," he added.

The opposition and Greens supported the call for the big four to pass on the rate cut in full. The Greens warned that if another crisis hits the financial sector, the banks could expect the cold shoulder from Parliament if they would need assistance. The party also said that the government could also not grant the banks a $4-billion tax cut over the next 10 years as part of a proposed company tax reduction linked to the mining tax.

Greens banking spokesman Adam Bandt said the big four could afford to pass the rate reduction in full because the banks registered a record $23-billion profit for 2011.

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