Allahabad Bank cuts lending rate by 0.3%

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

The base rate has been be reduced to 9.95% from 10.25%, 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%.

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

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% 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% to 7.25, but left all other policy tools like cash reserve requirement unchanged at 4% and

Statutory Liquidity Ratio (SLR) at 21.5%.

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