Following most banks, public sector lenders Union Bank of India and Dena Bank reduced their base rates thereby making loan borrowing cheaper for customers.
The base rate is the minimum lending interest rate below which banks cannot lend.
Major banks including State Bank of India, Bank of Baroda, IDBI Bank Ltd and Punjab National Bank among others have already slashed their base rates.
Union Bank revised its base rate downwardly by 25 basis points (bps) to 10.25 per cent from the existing 10.50 per cent, while, Dena Bank decreased its base rate by 20 bps to 10.25 per cent from 10.45 per cent.
A basis point is equal to one hundredth of a percentage point.
The revised rates for both public sector banks will be effective from February 09.
On January 29, Reserve Bank of India in its third monetary policy review cut repo rate (rate at which RBI lends short-term money to banks) and cash reserve ratio (the share of bank deposits parked with the RBI) by 25 bps each. The 25 bps cut in CRR will release Rs 18,000 crore into the system.
In view of the reduction in base rate, the interest rate on home loans and car loans stands reduced to 10.25 per cent and 10.70 per cent per annum respectively, Union Bank said in a statement.