State Bank of India cuts base rate by 0.05%
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State Bank of India cuts base rate by 0.05%

Last Updated: Wednesday, January 30, 2013, 20:52
 
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State Bank of India cuts base rate by 0.05%
Mumbai: Country's largest lender State Bank of India (SBI) Wednesday cut lending rate by 0.05 percent, a day after the Reserve Bank cut its key policy rates.

After this marginal reduction, SBI's base rate, or the minimum rate of lending, will come down to 9.70 percent from 9.75 percent effective February 4.

"Through this reduction, we are passing on a little more than what we gain through the rate cut by the Reserve Bank," a senior SBI official told PTI this evening, after a meeting of the bank's Asset Liability Committee (ALCO).

The old benchmark prime lending rate will also go down by a similar 0.05 percent, he said.

The bank has not cut deposit rates as the ALCO felt its offering is among the lowest in the market at present, the official said.

SBI, which has one of the most aggressive offerings among domestic banks, had last cut its base rate by 0.25 percent in September, 2012.

The official said SBI is gaining "around Rs 275 crore and passing around Rs 350 crore... This will have a very negligible impact on our margins".

The bank will earn around Rs 225 crore by deploying the additional Rs 2,780 crore funds which get released due to the 0.25 percent CRR cut.

The Reserve Bank yesterday cut its short-term lending rate by 0.25 percent and also reduced the CRR by a similar amount to ease the strained liquidity conditions.

Also, taking into account the average borrowing under the overnight window, an additional Rs 50 crore through the repo cut will be earned, the official said.

A majority of bankers said they would transmit the benefits of the RBI moves and state-run IDBI Bank acted quickly with a 0.25 percent cut in its base rate to 10.25 percent. HDFC Bank and Federal Bank announced reduction in a few segments like auto loans to the tune of 0.25-0.50 percent.

"This is a very secular cut and we are transmitting all that we stand to gain, in fact a little bit more than that," the SBI official said.

PTI


First Published: Wednesday, January 30, 2013, 20:52


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