MUMBAI (Reuters) - State Bank of India, the country's top lender, will reduce its base lending rate by 15 basis points to 9.85 percent, effective Friday, senior executives at the lender said on Tuesday.
SBI is the first major bank to cut its base lending rate this year.
The Reserve Bank of India proposed earlier on Tuesday 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 percent on Tuesday, but is disappointed that after two rates cuts earlier this year just four of 45 Indian banks have lowered their lending rates.
(Reporting by Devidutta Tripathy; Editing by Sumeet Chatterjee)
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