UBI lowers minimum lending rate to 10 percent

Following the Reserve Bank of India's (RBI) move to cut the repo rate by 25 basis points to 7.75 percent, state-owned United Bank of India (UBI) followed suit announcing reduction of the minimum lending rate by 0.25 percent.

"It has been decided by the asset liability management committee January 15, that the base rate of the bank will be reduced from 10.25 per cent to 10 per cent effective February 1," UBI said in a statement.

With the reduction in the base rate, all kinds of loans, including housing and auto loan, are expected to become cheaper.

The bank had earlier revised its base rate to 10.25 percent and with the recent cut it is now at par with State Bank of India and other top public sector banks which have their benchmark rate pegged at 10 percent.

The Kolkata-based bank, however, became the first to initiate the base rate reduction.

RBI's rate cut comes after a gap of over 20 months, the last being May 3, 2013, when the repo rate was slashed by 0.25 percent.

Repo rate is the rate at which RBI lends money to commercial banks in case of any funds crunch.