New Delhi: The country’s second largest private sector lender HDFC Bank on Monday slashed benchmark lending rate by 25 basis points (bps) to 15.75%.
Benchmark prime lending rate has been reduced to 15.75% per annum with effect from 20 July, HDFC Bank said on its website.
The cut in lending rate follows the reduction in the fixed deposits rate effective from 18 May.
In the past six months, the PLR (prime lending rate) has been reduced by 75 bps. The bank last reduced its PLR in December 2008, when the rate was brought down by 50 bps to 16%.
Private sector lenders mostly give loans below PLR. However, some of the corporate loans are linked to the benchmark rate.
Thus, to study the relevance of PLR in the changed scenario, the Reserve Bank of India (RBI) last month constituted six-member working group to review the benchmark prime lending rate (BPLR) system and suggest a mechanism for pricing of floating rate loans, a move that will improve transparency in fixation of interest rates on housing loans by banks.
The working group, chaired by RBI executive director Deepak Mohanty comprises J P Morgan India chief economist Jahangir Aziz and Indian Institute of Management (IIM) Ahmedabad Professor as its members.