The nation’s largest lender State Bank of India on Tuesday reduced its base rate by 15 basis points after the RBI cut repo rate by 25 basis points.
SBI reduced its base rate or minimum lending rate to 9.70 per cent from 9.85 per cent effective June 8.
While the Reserve Bank has cut its lending rates by 75 basis points (0.75 percentage point) in three instalments, the SBI has done so by 30 bps (0.30 percentage point) in two tranches.
“The bank has decided to cut base rate by 0.15 per cent to 9.70 per cent effective June 8,” the bank said.
After the last policy meet on April 7 also, SBI took other banks by surprise when it cut base rate by 15 bps to 9.85 per cent.
The Reserve Bank today reduced policy rate by 25 bps to 7.25 per cent from 7.50 per cent.
RBI Governor Raghuram Rajan today also urged banks to pass through the sequence of rate cuts into lending rates. Despite two repo rate cuts by RBI, very few banks have passed on the benefits to customers.
Welcoming the “timely repo rate cut” by the Reserve Bank, State Bank chairperson Arundhati Bhattacharya said she “anticipates the rate cut will transmit through the banking system sooner than later”.
She also said that “with monsoon forecast going a little awry and the RBI upping its inflation projections for March 2016, the government should now push for more public infrastructure spends that would support growth in the near term and create more jobs.”
Meanwhile, mid-sized state-owned Allahabad Bank also cut its base rate by 0.3 per cent. The base rate has been reduced to 9.95 per cent from 10.25 per cent, effective June 8, the bank said in an exchange filing.