Dena Bank on Thursday reduced its base rate, or minimum lending rate, by 0.30 per cent to 9.70 per cent from 10 per cent earlier.
The new base rate will be applicable from October 5.
“Almost 80 per cent of our advances are linked to base rate so there would be an impact of 20-25 basis points on our margins,” the bank’s Executive Director R K Takkar said.
However, the lender is planning to reduce its deposit rate at a later stage which will help in offsetting loss in margins, he added.
A number of lenders, including the country’s largest State Bank of India, PNB, IDBI Bank, Bank of Baroda, Bank of India and Axis Bank reduced their base rate after RBI on September 29 effected a 50 basis points cut in repo rate.
SBI, Andhra Bank and Bank of India were among the first to cut base rate in the range of 0.20-0.40 per cent in response to RBI’s surprise action.