With big banks, such as State Bank of India and ICICI Bank cutting their base rates (or the minimum lending rates) over the last one week, more banks joined the bandwagon on Monday.
Union Bank of India on Monday reduced its base rate by 0.35 percentage points to 9.65 per cent from 10 per cent.
A senior Union Bank official said following the base rate cut, new customers will get home loans at 9.65 per cent. Existing customers too will benefit as their floating rate home loans will get re-priced at the base rate.
The equated monthly instalment on a 30-year floating rate home loan will come down to ₹852 per lakh from ₹878 per lakh. So, a customer, who has taken a ₹50-lakh home loan, will save about ₹1,300 in EMI every month.
Standard Chartered too announced a reduction of 0.25 percentage points in its base rate from the current level of 9.75 per cent to 9.50 per cent.
The base rate change in the case of these two banks is effective from October 5, 2015. Canara Bank’s board has approved reduction in its base rate by 0.25 percentage points to 9.65 per cent from 9.90 per cent for loans/ advances effective from October 7.
State Bank of Mysore has revised downward its base rate to 9.65 per cent from 9.90 per cent, effective from October 7.
Corporation Bank has announced a reduction of 20 basis points in its base rate. The bank informed the NSE on Monday that it has reduced the base rate for lending to 9.70 per cent from 9.90 per cent. The reduction comes into effect beginning October 8.
Following the Reserve Bank of India cutting its policy repo rate on September 29, State Bank of India became the first bank to get off the block, announcing 0.40 percentage points cut its base rate to 9.30 per cent.
Andhra Bank and Bank of India followed suit on the same day, cutting lending rates by 0.25 percentage points each to 9.75 per cent and 9.70 per cent, respectively.
Repo rate is the interest rate at which Reserve Bank provides short-term funds to banks to help overcome liquidity mismatches.