Karnataka Bank cuts lending rate by 0.25%

Private sector Karnataka Bank today cut base rate or minimum lending rate by 0.25% to 10.50%, a move which will lead to lower EMIs for its customers.

The bank has revised the base rate for lending from 10.75% to 10.50% with effect from June 1, Karnataka Bank said in a filing to the BSE.

With the reduction, all loans linked to base rates will now become cheaper by at least 0.25%.

The said reduction is applicable to the existing loans and also for the future loans, it said adding, this will retail, MSME and export customers among others to avail funds at reduced rates and to stay competitive in their market.

"As the economy is gaining momentum, the present reduction in base rate would further fuel the investment sentiment and support long term growth," it said.

During the month, many banks including Punjab National Bank, Bank of Baroda, and IDBI Bank reduced base rate by 0.25% to 10%.

State Bank of India, the country's largest lender, had reduced its base rate by 0.15% to 9.85% effective April 10.

Banks such as SBI, ICICI Bank, HDFC Bank and Axis Bank had cut lending rates by up to 0.25% after Reserve Bank of India Governor Raghuram Rajan's tough talk with bankers on April 7.

The RBI had blamed banks for not passing the benefits of two repo rate cuts to borrowers and termed as "nonsense" the lenders' claims that cost of funds is high.

"The banks' marginal cost of funding (has) fallen, the notion that it hasn't fallen, is non-sense. It has fallen," Rajan had said.