HDFC Bank cuts base rate by 5 bps

HDFC Bank Ltd on Tuesday reduced its base rate, or minimum lending rate, by five basis points (bps) to 9.3 per cent, making it on a par with that of State Bank of India.

HDFC Bank's treasurer Ashish Parthasarathy said the base rate cut was an outcome of a mandatory review of the base rate every quarter and deposit rates would remain unchanged.

With the latest rate cut, effective December 28, HDFC Bank has cut rates by 70 basis points. On September 1, the bank had reduced its rates by 35 basis points. Before that in April and June, the bank had reduced rates by 15 basis points each.

Banks are responding to the cumulative 125 basis points rate cut by the Reserve Bank of India (RBI). In its fourth bi-monthly monetary policy on September 29, the central bank cut its policy rate by 50 basis points.

Even before the September policy rate cut, banks - including State Bank of India, HDFC Bank and ICICI Bank - had lowered their rates by 30-35 basis points.

But, the banks are yet to pass on the new policy rates to customers, which might change soon as the lenders would start calculating their base rates on marginal cost basis from April 1. Parthasarathy said HDFC Bank calculates its base rate on a marginal cost basis. India's largest private sector lender ICICI Bank's base rate stands at 9.35 per cent.