A day after the Reserve Bank of India (RBI) slashed repo rate and cash reserve ratio (CRR) by 25 basis points, State Bank of India has reduced its base rate by five basis points only to 9.70 per cent.
“The new rate will be effective from February 4,” the bank said. However, the quantum of the reduction came as a surprise for analysts who expected a 15-25 bps reduction.
Base rate is the minimum rate of interest that a bank is allowed to charge from its customers. The change has also surprised as IDBI Bank on Tuesday had cut its lending rate by 25 bps and private sector HDFC bank cut auto loan rates by upto 50 basis points.
HDFC bank will charge 25 bps less on car loans while two-wheeler loan will be cheaper by 50 bps. The new rates would be effective from February 1. Last month, the bank had reduced its base rate by 0.1 per cent to 9.7 per cent, the lowest in the market.
Debabrata Sarkar, CMD, Union Bank of India, said the bank has decided to extend its festive offer up to March 31, 2013. The bank will not charge any processing fees for home and vehicle loans sanctioned till March 31, 2013. Federal Bank has slashed the interest rate for three-year car loans to 10.45 per cent from 11.20 per cent. For 5-year car loans, it would be 11.70 per cent.
Rupee surges 47 paise against $
The rupee on Wednesday surged by 47 paise to close at a three-and-a-half-month high of 53.30 after the RBI cut lending rates to boost growth. “The rupee continued its upward movement today mainly buoyed by the rate cut, which has created some sense of optimism in the markets,” a dealer said.