Public sector banks ? Andhra Bank, Canara Bank, Bank of India (BoI) and Oriental Bank of India (OBC)on Monday re-aligned their base rates by trimming them by 25 basis points to 10.50% in line with their peers. Most banks now have a base rate of 10.50% except State Bank of India and other private sector banks, which have lower base rate than the industry average.

Almost all banks have now reduced their base rates in order after the Reserve Bank of India cut the key policy rate by 50 basis points on April 17, 2012. ICICI Bank had lowered its base rate by 25 basis points to 9.75% while Punjab National Bank (PNB) and Bank of Baroda (BoB) too dropped their base rates by 25 basis points to 10.5%.

Union Bank of India has reduced the deposit rates in the short maturities by 15-25 bps and in the long maturities by 25-40 bps.

Along with the base rate cut, the bank is examining the spreads in the Small and Medium Enterprises and retail loans for a possible segment-wise revision and so is home loan.

Kotak Mahindra Bank and Deustche Bank joined the bandwagon announcing a base rate cut of 25 and 50 bps to 9.75% and 10% respectively. These banks said its customers for consumer loans including home and personal loans and those for corporate loans can now enjoy lower interest rates. United Bank India (UBI) reduced its base rate and benchmark prime lending rate (BPLR) by 15 basis points and 25 basis points, respectively to 10.45% and 14.60 %.

Deposit rates have been also reduced ranging between 10 basis points and 35 basis points.

Down south, Lakshmi Vilas Bank cut term deposits between 25 to 50 bps. Other banks which have reduced lending rates since the Reserve Bank of India (RBI) announced a 50 bps cut in the repo rate last Tuesday are Syndicate Bank, Oriental Bank of Commerce, IDBI Bank and Bank of Maharashtra.

The RBI has projected deposit growth at 16% for 2012-13 while loan growth has been projected at 17%. Outstanding deposits for the banking system at the end of March, 2012 were Rs 63,14,400 crore at the end of March, 2012, compared with Rs 55,81,600 crore at the end of 2010-11.

The RBI?s infusion of liquidity through cuts in the CRR of 125 basis points to 4.75% resulting in an infusion of liquidity to the tune of Rs 80,000 crore has helped bring down wholesale borrowing rates.

Further, RBI has enhanced the borrowing limit for banks under the Marginal Standing Facility to 2% of net demand & time liabilities (NDTL) and the rate at which banks can borrow is now 9%.