Making auto,home and corporate loans cheaper,ICICI Bank,Indias largest private sector lender,cut its lending and deposit rates by 0.25 per cent following the Reserve Bank of India decision to slash repo rates by 0.50 per cent two days ago. Accordingly,the banks base rate,or the minimum rate of lending,stands reduced by 25 basis points to 9.75 per cent,while the prime lending rates also saw a similar reduction to 18.50 per cent.
Punjab National Bank (PNB),the second largest public sector bank,also announced a cut in lending rate by 0.25 per cent,setting the stage for other PSU banks to slash the rates.
With the easing of systemic liquidity,we have already seen some correction in wholesale deposit rates. We expect the cost of funds to gradually come down and this reduction in the lending rates is a proactive move by us to pass on the benefit to our valued customers, ICICI managing director and CEO Chanda Kochhar said,explaining the reason for the reductions. The revised base rate is applicable from April 23,the bank said.
ICICI has also cut rates on loans under the older BPLR (benchmark prime lending rate) regime by 0.25 per cent to 18.50 per cent and for consumer loans,apart from cutting its floating reference rate (FRR) by a similar amount to 15.50 per cent which will benefit home loan borrowers.
The move comes a day after state-run bank IDBI Bank announced a 0.25 per cent cut in lending rates while other banks,including HDFC Bank,have also hinted at similar moves since the RBI announcement.
The bank has decided to decrease the base rate by 25 basis points from 10.75 per cent to 10.50 per cent, PNB said in a statement. The base rate is the minimum interest rate below which banks cant lend. With the reduction in rates,likely to be followed by other lenders,housing and corporate loans would become cheaper by at least 0.25 per cent. Besides,PNB has also decided to slash interest rate on term deposits of less than Rs 1 crore by 0.25-0.50 per cent in select buckets. The new rates will be effective from May 1,PNB said.