Kotak Bank cuts base rate 0.15% to 9.85%

Private sector lender Kotak Mahindra Bank today joined its larger rivals when it cut its base rate by 0.15% to 9.85%.

Chennai-based mortgage lender Sundaram BNP Paribas Home Finance, too, brought down its interest rate to 9.95% from the earlier 10.15%, a 20-basis point reduction, making home loans cheaper for its customers.

Lakshmi Vilas Bank on the other hand reduced its deposit rates on select maturities by up to 0.15% following the base rate cut announced last week.

"We have reduced our base rate from the current level of 10% to 9.85% with effect from April 16," Kotak Mahindra Bank, which recently acquired smaller player ING Vysya Bank, to become the fourth-largest private lender, said in a statement here.

All the borrowers, including the existing ones, will benefit from the downward rate revision, the bank said.

The bank joins a growing list of lenders that have reduced their minimum lending rates since RBI Governor Raghuram Rajan's some tough talk last Tuesday for not passing on the benefits of the central bank's two rate cuts to borrowers.

At the customary press conference post policy review, Rajan had termed banks' contention of the cost of funds being high as "non-sense" and wanted them to play along.

The largest lender, State Bank, had announced a 0.15% cut in its base rate the same day while others like HDFC Bank (0.15%), ICICI Bank (0.20%) and Lakshmi Vilas Bank (0.20%) followed suit.

Mortgage major HDFC, too, slashed its lending rate by 20 basis points.

The RBI had cut its repo rate, the rate at which it lends to banks, twice this year by a cumulative 0.50% to 7.5%.