Mumbai, Jan. 31 -- Taking a cue from the Reserve Bank of India, public sector lenders Punjab Nation Bank (PNB) and Union Bank on Thursday slashed their base rate by 0.25 percentage points, a day after India's largest bank, State Bank of India (SBI), announced a similar move. Other lenders are expected to lower their lending rates as well.
After the RBI lowered key lending rates on Tuesday, six banks have so far followed suit, bringing in the much-needed relief to borrowers.
Base rate is the rate below which banks cannot lend and lowering the rate makes home, auto, personal and other consumer loans cheaper.
"PNB has decided to decrease the base rate (or minimum lending rate) by 0.25 percentage points from 10.50% to 10.25% with effect from February 9, 2013," the bank said in a filing to the Bombay Stock Exchange (BSE).
Union Bank has also cut its base rate by 0.25 percentage points, taking it to 10.25%.
ICICI Bank, India's biggest private sector bank, will soon take a decision on slashing interest rate in its asset-liability committee meeting (ALCO). which is likely soon.
"We don't have a date (for ALCO meeting) fixed yet," said Chanda Kochhar, managing director and chief executive officer, ICICI Bank.
"Last April when the policy rate cut was announced, we were among one of the first banks to reduce base rate so that we pass on the benefit to all our existing customers as well. Even today our base rate of 9.75% is among the lowest in the banking industry," she added.
SBI had on Wednesday announced a 0.05 percentage point cut in the base rate while HDFC Bank, India's second-biggest private bank, announced a 0.5 percentage point cut in auto loan rates.
"Other banks may also cut rate in the coming days because they would like to stay in competition," said Kajal Gandhi, banking analyst, ICICI Securities.
Published by HT Syndication with permission from Hindustan Times.