Money & Banking

Kotak Bank, YES Bank cut base rate by 25bps

Our Bureau Mumbai | Updated on January 22, 2018 Published on October 01, 2015

After major public sector banks and Axis Bank, YES Bank and Kotak Bank also revised its base rate with a reduction of 25 basis points (bps) each to 10.25 per cent and 9.50 per cent, respectively.

Both rates will be effective from October 5.

“All categories of loans (other than the exceptions permitted by RBI) will be priced with reference to the revised Base Rate,” Kotak Bank said in a statement.

Kotak is the second private bank to slash its base rate after the RBI’s 50 bps policy rate cut on Tuesday.

Base rate is the minimum lending rate beyond which banks do not lend to customers.

After the banking regulator’s big surprise on Tuesday, most banks are likely to pass on that rate reduction by at least half (of RBI’s reduction) to the loan borrowers.

Banks have also seen deposit rates coming down and further reduction will be seen.

After RBI’s rate cut, State Bank of India was quick to respond with a 40 bps cut in its base rate which now stands at 9.30 per cent. Followed by that, Bank of India cut its base rate by 25 bps to 9.70 per cent, Andhra Bank by 25 bps to 9.75 per cent, and State Bank of Travancore by 20 bps to 9.95 per cent.

On Wednesday, Punjab National Bank cut its base rate by 0.40 per cent, from 10 per cent to 9.60 per cent; from October 1, Bank of Baroda by 0.25 per cent to 9.65 per cent, and Oriental Bank of Commerce by 0.20 per cent to 9.7 per cent.

IDBI Bank and UCO Bank also cut their base rates by 25 bps each to 9.75 per cent and 9.70 per cent, respectively.

Since January, the RBI has reduced the key policy rate (repo rate) by 125 bps. The repo rate is the rate at which banks borrow short term fund requirements from RBI.

Published on October 01, 2015
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