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Kerala-based Federal Bank today cut its base rate or the minimum lending rate by 0.20 per cent to 10.45 per cent following last week’s RBI reduction in the key policy rate.
The bank action will be applicable from May 2, it said in a statement.
The Reserve Bank had surprised all by slashing the repo rate at which it lends to the banks by 0.50 per cent to 8 per cent at its annual monetary policy announcement on April 17.
Reacting to the move, all the bankers had said this will lead to lower rates but some opined that the deposit rates will go down first and the reduced cost of funds will trigger base rates decreasing.
Other lenders like ICICI Bank, IDBI Bank and Corporation Bank have already announced cut in interest rates.
State Bank of India, the country’s largest lender has cut rates on select offerings, but is keeping the base rate intact.
Federal Bank reduced term deposit interest rates by up to 0.25 percent depending on maturity, the statement said.
The reduced deposit rates will be effective from April 26, it added.
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