Following State Bank of India SBI, HDFC Bank, the country’s second-largest private sector bank, has cut its base rate by 15 basis points (bps) to 9.7 per cent.
The new rates came into effect on Monday June 15, 2015.
This move comes after the Reserve Bank of India (RBI) cut the key policy rate or the repo rate by 25 bps earlier this month.
Base rate is the minimum lending rate offered by banks to borrowers and all loan rates are linked to it. One bps is one hundredth of a percentage.
This is the second base rate cut by the bank in the last three months. After the April monetary policy by RBI, HDFC Bank had cut its base rate by 15 basis points to bring it down to 9.85 per cent.
In an interaction with BusinessLine last week, HDFC Bank Managing Director Aditya Puri had said that the bank will cut its base rate soon.
After RBI’s rate cut again earlier this month, SBI, the country’s largest bank, has reduced its base rate by 15 bps to 9.7 per cent.
ICICI Bank, the largest private sector lender, which reduced its base rate in April by 25 bps to 9.75 per cent, has not yet taken a call after RBI’s June rate cut decision.
Since January, RBI has cut the repo rate by 75 bps.
Most banks have reduced the base rate by 25-30 bps in response to RBI's rate cut of 75 bps.The banking regulator had said it expected full transmission of the rate cuts by banks for its borrowers.
Apart from SBI and now HDFC Bank, Central Bank of India, Allahabad Bank of India, IDBI Bank, Punjab and Sind Bank and Federal Bank among others have slashed their base rates.