More banks join rate cut bandwagon

BoB, PNB, Axis, UCO, OBC cuts base rate; ICICI Bank yet to take a call

A day after the country’s largest lender, State Bank of India (SBI), reduced its base rate by 40 basis points (bps) to 9.3 per cent in response to the 50-basis-point repo rate cut by the Reserve Bank of India (RBI), a slew of lenders followed on Wednesday. Those who cut base rate on Wednesday are Bank of Baroda, Punjab National Bank, Axis Bank, and UCO Bank.

New Delhi-based Punjab National Bank cut its base rate by 40 bps to 9.6 per cent. Bank of Baroda, the second-largest lender in the country, reduced the rate by 25 bps to 9.65 per cent. Another public sector lender, UCO Bank, reduced its base rate by 25 bps to 9.7 per cent. Oriental Bank of Commerce reduced its rate by 20 bps to 9.7 per cent. Axis Bank, the third-largest private sector lender, revised its rate by 35 bps, from 9.85 per cent to 9.50 per cent. SBI’s rate continues to be the lowest.

Mumbai-based public sector lender Union Bank of India will announce its rate on Thursday. Like all other lenders, Union Bank's new rate will come into effect from Monday.

ICICI Bank, India’s largest private sector bank, is yet to take a call on its base rate, which is 9.7 per cent. HDFC Bank, the second-largest private lender, has also not reduced its rate. But, it had reduced its rate by 35 bps to 9.35 per cent on September 1.

The RBI had on Tuesday reduced the key policy rate or the repo rate by 50 bps to 6.75 per cent to boost the economy, in which demand for loans has remained sluggish for the past three years.

 

 

The banking regulator reduced the repo rate by 125 bps in 2015, but the base rate cut by banks was only 35 to 70 bps. Apart from SBI, Bank of India and Andhra Bank also reduced their base rates on Tuesday.

Bank of India will announce its new base rate on Thursday, expected to be 25 bps lower than the existing rate. Union Bank’s new base rate will also come into effect from 5 October.