State-run Vijaya Bank today announced that it has reduced its base rate by 0.15 per cent to 9.85 per cent.
The company in a BSE filing said “… Asset and Liability Committee of the Bank has approved the reduction of base rate by 15 basis points (bps) from 10 per cent per annum to 9.85 per cent per annum with effect from September 04, 2015.”
After repeated calls from RBI to pass on the benefit of repo rate cut to customers, private lender HDFC Bank and state-owned Canara Bank had cut their respective base rates by 0.35 per cent and 0.10 per cent last week.
The lowering of base rates by Vijaya Bank will make home and other consumer loans cheaper to customers, such as auto and retail.
In RBI’s policy review early August, governor Raghuram Rajan had expressed disappointment that banks were not lowering their minimum lending rate.
The apex bank has cut the key policy rate or the repo by as much as 0.75 per cent in three separate tranches of 0.25 per cent each beginning since January.
Rajan said banks have only transmitted up to 0.3 per cent in the form of lowering their base rate.
Earlier this week, Reserve Bank has also framed draft guidelines suggesting banks to migrate by April 1, 2016 to calculating base rate on marginal cost of funds rather than the current practise where different banks follow different norms to decide the minimum lending rate.
At present, base rate of country’s three largest banks – SBI, ICICI Bank and HDFC Bank stands at 9.7 per cent each.
It is expected other banks may join-in to cut their base rates going ahead.
Vijaya Bank shares traded 2.25 per cent lower at Rs 34.70 apiece on BSE in pre-close session.