Axis Bank cuts base rate by 20 basis points to 9.95%
The move follows three large banksSBI, ICICI Bank Ltd and HDFC Bank Ltdcutting their base rates on Tuesday
Mumbai: Private sector lender Axis Bank Ltd on Wednesday said it has reduced its base rate by 20 basis points (bps) to 9.95% with effect from 13 April.
Base rate is the minimum lending rate that a bank can charge its customers. One basis point is one-hundredth of a percentage point.
The move follows three large banks—State Bank of India (SBI), ICICI Bank Ltd and HDFC Bank Ltd—cutting their bases rate on Tuesday.
While SBI and HDFC Bank cut their respective base rates by 15 bps each to 9.85%, ICICI Bank reduced its minimum lending rate by 25 bps to 9.75%.
On Tuesday, Reserve Bank of India (RBI) governor Raghuram Rajan had said that the central bank would wait for banks to pass on the benefits of previous rate cuts to their customers before making any further moves. In 2015, RBI has cut its repo rate, or the rate at which it lends to banks, by 50 bps to 7.5%.
Until Tuesday’s monetary policy announcement, most banks had stayed away from reducing their lending rates, saying their cost of funds had not changed meaningfully despite the repo rate cuts.
In a post-policy interaction, Rajan said the banks’ logic that cost of funds has not come down enough to reflect on their base rate is “nonsense". The governor lambasted the banks for taking refuge in the methodology of base rate calculation as a way to justify not cutting rates.
“Base rates don’t stand in the way when interest (policy) rates are raised, but they seem to come in the way when interest rates are cut," Rajan had said.
At 10:33am, Axis Bank shares were trading at ₹ 558.10 apiece on BSE, down 0.14% from their previous close.
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