SYDNEY, Aug 3 (Reuters) - Australian Prime Minister Malcolm...

SYDNEY, Aug 3 (Reuters) - Australian Prime Minister Malcolm Turnbull on Wednesday lambasted the country's largest banks for refusing to fully pass on an official interest rate cut, demanding top executives front the public and explain themselves.

The attack from the conservative leader piles political pressure on Australia's "Big Four" lenders amid opposition calls for a high-powered judicial inquiry into the banking sector, following a series of scandals involving wealth management, insurance claims and interest rate rigging.

"The banks should pass on the full extent of the rate cut," Turnbull said at a press conference in Canberra.

"They should do that, and if they are not prepared to do it, as appears to be the case, then their chief executives should explain very clearly to the Australian people and their customers why they have not done so."

The Reserve Bank of Australia slashed official cash rates by a quarter point to a record low of 1.50 percent on Tuesday.

The four major banks - Commonwealth Bank (CBA), National Australia Bank (NAB), ANZ Banking Group (ANZ), and Westpac Banking Corp (WBC) - responded by lowering borrowing costs on mortgages by only 10-14 basis points.

Australian banks are coming off a golden era of six straight years of record profits but are now facing faltering earnings growth, narrowing profit margins, rising bad debts and regulatory pressure to shore up their capital base.

According to a Morgan Stanley estimate, a 12 basis-point reduction in home loans by top mortgage lender Commonwealth Bank adds 4 basis points to group margins and about 2.5 percent to cash profit on a full-year basis.

The four banks said they would boost deposit rates to attract more savings, helping them reduce dependence on offshore markets where borrowing costs have shot up.

Analysts said that while higher deposit rates would further squeeze the banks' already record-low margins, they were under pressure from the Australian Prudential Regulatory Authority to reduce their levels of short-term offshore funding.

Even so, Treasurer Scott Morrison said there was "no reason on the issue of overseas funding costs" for the banks to keep the benefit of the official cash rate cut for themselves.