In an indication of how major lenders are fighting it out to get a share of the tepidly growing loan market, ICICI Bank - the country largest private sector lender - reduced its base rate by only five basis points (bps) to 9.7 per cent, to match its biggest rivals, State Bank of India (SBI) and HDFC Bank.
Loan demand, particularly from the corporate sector, has been sluggish amid a slowing economy while home and automobile loans are the only segments where banks are pushing.
On June 2, the Reserve Bank of India (RBI) reduced the key policy rate or the repo rate by 25 bps to 7.25 per cent. SBI immediately responded by reducing its base rate by 15 bps to 9.70 per cent, leaving behind ICICI Bank and HDFC Bank. In April, ICICI Bank reduced its base rate by 25 bps to 10.75 per cent, while SBI reduced it by 15 bps to 9.85 per cent.
HDFC Bank's rate action was similar to SBI, which reduced its base rate by 15 bps in April and another 15 bps in June.
Meanwhile, SBI on Thursday reduced its deposit rates for Rs 1 crore and above by 25 bps across various maturities. For deposits of more than one year to 455 days, it will offer 7.5 per cent interest, compared with eight per cent paid earlier.