New Delhi/Mumbai: A number of banks including state-run PNB, IDBI Bank and Bank of Baroda, as also private sector lender Axis Bank Wednesday lowered lending rates -- a day after RBI surprised with a larger-than-expected policy rate cut and prodded banks to pass on the benefits.
However, the reduction in lending rates of the banks is so far less than RBI's 0.5 percent cut, with state-run SBI and Punjab National Bank (PNB) leading the charts with cuts of 0.4 percent each in its base rate.
The base rate is the minimum rate of interest at which a bank lends to its borrowers.
Axis Bank cut its base rate by 0.35 percent, while the reduction by IDBI Bank was 0.25 percent.
ALSO READ: Axis Bank cuts base rate by 0.35% to 9.50%
Country's largest lender State Bank of India, Andhra Bank and Bank of India were among the first to cut base rate yesterday in the range of 0.20-0.40 percent in response to RBI's repo rate reduction to 6.75 percent.
While the base rate cut so far has come mostly from public sector lenders, private sector players, except Axis Bank, are expected to follow suit soon.
Those announcing the rate cuts today included Bank of Baroda (by 0.25 percent), Oriental Bank of Commerce (0.20 percent) and IDBI Bank (0.25 percent).
PNB said its base rate has been cut by 40 basis points to 9.60 percent from October 1.
ALSO READ: IDBI Bank cuts base rate by 0.25% to 9.75%
Soon after the policy rate cut, RBI Governor Raghuram Rajan, as also Finance Minister Arun Jaitley, had yesterday expressed hope that banks will transmit the benefit to borrowers to boost investments and the economy.
Bankers have also been almost unanimous in saying that borrowers should expect cut in lending rates following the RBI move.
BoB said it has decided "to reduce base rate by 25 basis points from 9.90 percent per annum to 9.65 percent" with effect from October 5. It also reduced the Benchmark Prime Lending Rate (BPLR) by 25 basis points from 14.15 percent to 13.90 percent.
Oriental Bank of Commerce said it has slashed its base rate by 20 basis points to 9.70 percent with effect from today itself.
Axis Bank announced a cut of 0.35 percent in base rate to 9.50 percent.
With the proposed rate reduction of 0.40 percent, SBI's minimum lending rate would come down to 9.30 percent -- the most competitive in the market at present.
Bank of India has reduced its base rate by 0.25 percent to 9.70 percent, while Andhra Bank has announced a similar cut.
IDBI Bank cut its base rate by 0.25 percent to 9.75 percent, which would be effective from October 5.
"The reduction in interest rate is expected to positively encourage loan growth, both in the retail consumer segment, as also revitalise fixed capital formation through higher corporate sector lending, thereby supporting the growth impulses in the economy," the bank said in a statement.
IDBI Bank has also reduced the retail term deposit rates in select buckets by 25-50 basis points with effect from October 5.
Later, Punjab and Sind Bank also said in a statement that it reduced its 'Base Rate' by 25 basis points to 9.75 percent. Besides, it has also reduced its 'Benchmark Prime Lending Rate' (BPLR) by 25 basis points to 14.75 percent, effective from October 5, 2015.
At least six banks announced their rate cuts today itself, in addition to announcements made by four banks earlier yesterday.
Soon after the RBI's rate cut yesterday, Finance Minister Arun Jaitley said, "We are looking forward now to the transmission of these cuts which will effectively help to boost confidence and investment. They will also help to realise the economy's medium term potential growth rate."