SBI, HDFC Bank reduce lending rate by 15 bps to 9.85%

State Bank of India, the country's largest lender, today announced a reduction in its lending rate by 15 basis points to 9.85%.

This will be effective from 10th April. SBI is the first major bank to cut its base lending rate this year.

HDFC Bank also followed suit by slashing its lending rate by 0.15% to 9.85% effective from April 13.

The Reserve Bank of India proposed earlier today that banks should decide lending rates based on their marginal cost of funding, hoping the shift will persuade them to lower lending rates faster in response to central bank easing measures.

The RBI kept its key policy rate on hold at 7.5%, but is disappointed that after two rates cuts earlier this year just four of 45 Indian banks have lowered their lending rates.