Allahabad Bank cuts lending rate by 0.3%

The base rate has been reduced to 9.95% from 10.25%, effective June 8

First off the blocks, state-owned Allahabad Bank today cut its base rate or minimum lending rate by 0.3 per cent within hours of RBI lowering key policy rate for the third time this year.

The base rate has been reduced to 9.95 per cent from 10.25 per cent, effective June 8, Allahabad Bank said in a filing to the BSE.

With the reduction, all loans linked to the base rate will come down by at least 0.3 per cent.

Consequently, Benchmark Prime Lending Rate (BPLR) of the bank will be reduced to 14.20 per cent from existing 14.50 per cent.

The rate cut by the Kolkata-based lender comes against the backdrop of the Reserve Bank of India reducing the repo rate by 0.75 per cent since January, 2015.

Following status quo in RBI policy in April, many lenders including SBI, ICICI Bank, HDFC Bank had reduced base rates.

Other big lenders such as Punjab National Bank, Bank of Baroda, and IDBI Bank reduced their lending rates last month.

As part of its second bi-monthly monetary policy review today, RBI cut the repo rate (short-term lending rate) from 7.5 per cent to 7.25, but left all other policy tools like cash reserve requirement unchanged at 4 per cent and Statutory Liquidity Ratio (SLR) at 21.5 per cent.

RBI Governor Raghuram Rajan asked banks to follow suit and pass on the rate cuts -- 0.75 per cent since January -- to individual and corporate borrowers.