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SBI, ICICI, HDFC Bank cut rates, EMIs set to fall

ICICI Bank with 0.25% cut to 9.75% was the most aggressive among the banks that announced slashing rates on Tuesday.

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Country's biggest bank SBI and private sector lenders ICICI and HDFC Bank late Tuesday evening cut their base rates by 0.15 - 0.25%, a move that could bring relief to corporate and retail borrowers.

This is probably the first rate cut by banks in more than a year. ICICI Bank with 0.25% cut to 9.75% was the most aggressive among the banks that announced slashing rates on Tuesday "We have decided to reduce the base rate by 15 bps from 10% to 9.85% per annum and benchmark prime lending rate by 15 bps from 14.75% to 14.60%," State Bank of India (SBI) said in a statement.

SBI said its new rates will be effective April 10. Its Chairman Arundhanti Bhattacharya said other lenders should follow the move and lower their rates. She also hinted at lowering of deposit rates going forward.
Both SBI and ICICI Bank's new lending rates are effective from from April 10.

HDFC Bank reduced base rate 0.15% point to 9.85% which will come into effect from April 13. Smaller player Laxmivilas Bank too announced 0.15% cut base rate to 11.10% effective April 14.

The move came within hours of Reserve Bank Governor Raghuram Rajan blaming banks for not passing the benefits of two repo rate cuts to borrowers and termed as "nonsense" the lenders claim that cost of fund was still high. "The banks marginal cost of funding (has) fallen, the notion that it hasn't fallen, is nonsense; it has fallen!" Rajan told reporters during the post policy meeting here today.

The Reserve Bank of India in its monetary policy review earlier in the day left repo rate unchanged at 7.5%. An HDFC Bank official said the decision to cut lending rate was taking in the Asset Liability Committee meeting held today after the monetary policy announcement.

The bank has also lowered fixed deposit rate by 0.25% across various maturities. It has been brought down to 8.5% from 8.75% for maturity between 1-5 years in line with market. The lowering the deposit rate provided headroom to pass on the benefit to the borrowers, the official said, adding, thus, the base rate was reduced by 0.15% effective April 13. HDFC Bank had last reduced the base rate to 10% with effect from November 2, 2013.

Also Read: ICICI, HDFC Bank cut bulk deposit rates by up to 0.25%

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