Photo: Pradeep Gaur/Mint
Photo: Pradeep Gaur/Mint

SBI, Andhra Bank, Bank of India reduce loan rates after Reserve Bank action

SBI's rate cuts, which follwed RBI's policy rate cut announcement, will be effective 5 October

Mumbai: The country’s largest lender State Bank of India (SBI) on Tuesday cut its base rate by 40 basis points (bps) to 9.3%, soon after the Reserve Bank of India (RBI) reduced its policy repurchase rate by 50 bps.

One basis point is one-hundredth of a percentage point.

The bank will also be reducing its deposit rates by 25 bps across maturity baskets. Both rate cuts will be effective 5 October, SBI chairperson Arundhati Bhattacharya said.

The RBI in the morning lowered the repo rate, at which it lends to commercial banks, to 6.75% from 7.25%, surprising the market. Soon after the policy announcement, Andhra Bank cut its base rate by 25 bps. Late evening, Bank of India reduced base rate by 25 basis points to 9.70% from 9.95% effective 5 October 2015.

SBI in the last quarter had reduced its base rate by 30 bps to 9.7% from 10%.

Bhattacharya said the bank will be open to more rate cuts as RBI’s stance is still accommodative. The base rate cut will impact the bank’s margins by 10-11 bps, Bhattacharya said.

Andhra Bank in June had reduced its base rate by 25 bps from 10.25% to 10%.

Viswanath Pilla in Hyderabad contributed to this story.

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