New Delhi: State-owned Indian Bank Thursday slashed base rate or the minimum lending rate by 0.3 percent while United Bank of India (UBI) has reduced fixed deposit rates by up to 0.25 percent on select maturities.
With the reduction, the base rate would be 9.95 percent from 10.25 percent effective June 8, Indian Bank said in a statement.
All loans linked to the base rate would come down by at least 0.3 percent, it said.
The bank has revised its interest rates on its retail term deposits for 1 year to 8 percent and above 1 year to 7.75 percent, UBI said in a statement.
Currently, the interest rate on fixed deposits above 1 year is pegged at 8.25 percent.
The new rates will be effective from June 8, it said.
PNB and Axis Bank had yesterday reduced fixed deposit rates.
The decision by banks to cut interest rates on fixed deposits comes two days after the Reserve Bank reduced key policy rate.
As part of its second bi-monthly monetary policy review, RBI cut the repo rate (short-term lending rate) from 7.5 percent to 7.25, but left other policy tools like cash reserve ratio unchanged at 4 percent and Statutory Liquidity Ratio (SLR) at 21.5 percent.
Following policy action, several banks including market leader State Bank of India have reduced base rates or minimum lending rate. SBI cut it to 9.70 percent from 9.85 percent effective June 8.
Allahabad Bank cut base rate by 0.30 percent to 9.95 percent, while Dena Bank, Punjab & Sind Bank reduced their base rate by 0.25 percent each. Dena Bank and Punjab & Sind Bank lowered their base rate to 10 percent.
With these reductions, all loans linked to the base rate will come down proportionately.
IDBI Bank, however, has reduced bulk deposit rate, a move which is a precursor to a cut in lending rate.
Other banks are likely to follow suit in the next few days.
