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Allahabad Bank was first off the mark to cut its base rate to 9.95%, just a few hours after the RBI cut its key policy rate.
The state-owned Kolkata-based bank today cut its base rate or minimum lending rate by 0.3% after the RBI lowered the repo rate (rate at which banks borrow from RBI) for the third time this year by 25 bps to 7.25%.
“The base rate has been reduced to 9.95% from 10.25%, effective June 8,” Allahabad Bank said in a filing to the BSE.
With the reduction, all loans linked to the base rate will come down by at least 0.3%. Consequently, Benchmark Prime Lending Rate (BPLR) of the bank will be reduced to 14.20% from existing 14.50%.
The rate cut comes after a total of 75 bps rate cut by RBI since January this year. Following a status quo in RBI policy in April and pressure from RBI Governor Raghuram Rajan, many lenders including SBI, ICICI Bank, HDFC Bank had reduced base rates.
Some lenders such as Punjab National Bank, Bank of Baroda, and IDBI Bank reduced their lending rates last month.
As part of its second bi-monthly monetary policy review today, RBI cut the repo rate (short-term lending rate) from 7.5% to 7.25%, but left all other policy tools like cash reserve requirement unchanged at 4% and Statutory Liquidity Ratio (SLR) at 21.5%.
Rajan has yet again asked banks to follow suit and pass on the rate cuts - 0.75% since January.
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