Mumbai: State-run Union Bank of India on Monday reduced its minimum lending rate or base rate by 0.25 percentage points to 10 percent.
The city-headquartered lender slashed its base rate to 10 percent effective today, the bank said in a statement.
The Bank's card rate for home loans has come down to 10 percent, while the same for auto loans would be 10.45 percent, it said.
Without any cue from the Reserve Bank, state-run lenders started announcing interest rate cuts after a meeting in New Delhi last week, where Finance Minister asked them to slash rates in order to push up sagging investments to prop-up growth.
By not reacting to three consecutive cuts in the repo rate by the Reserve Bank, banks have invited criticism for not passing them to customers in the form of an interest rate cut.
The banks claim their cost of fund structures do not change even with the RBI moves to cut the interest rate, pointing to the deposit rates, which continue being high due to difficulties in mobilisation, and competition from other investment products like postal savings.
"We have advised banks to take a look at the base rate. The base rate of SBI is 9.7 percent. The average of the base rates of other banks is 10.2 or 10.25. We have asked them to take a look at the base rate," Chidambaram had said after meeting state-run bank chiefs.