A number of banks including private sector lender Axis Bank and state-run Punjab National Bank (PNB), IDBI Bank and Bank of Baroda today lowered lending rates — a day after the Reserve Bank of India (RBI) surprised with a larger-than-expected policy rate cut and prodded banks to pass on the benefits.

However, the reduction in lending rates of the banks is so far less than RBI’s 0.5 per cent cut, with state-run SBI and Punjab National Bank (PNB) leading the charts with cuts of 0.4 per cent each in its base rate.

The base rate is the minimum rate of interest at which a bank lends to its borrowers.

Axis Bank cut its base rate by 0.35 per cent, while the reduction by IDBI Bank was 0.25 per cent.

Country’s largest lender State Bank of India, Andhra Bank and Bank of India were among the first to cut base rate yesterday in the range of 0.20-0.40 per cent in response to RBI’s repo rate reduction to 6.75 per cent.

While the base rate cut so far has come mostly from public sector lenders, private sector players, except Axis Bank, are expected to follow suit soon.

Those announcing the rate cuts today included Bank of Baroda (by 0.25 per cent), Oriental Bank of Commerce (0.20 per cent) and IDBI Bank (0.25 per cent).

PNB said its base rate has been cut by 40 basis points to 9.60 per cent from October 1.

Soon after the policy rate cut, RBI Governor Raghuram Rajan, as also Finance Minister Arun Jaitley, had yesterday expressed hope that banks will transmit the benefit to borrowers to boost investments and the economy.

Bankers have also been almost unanimous in saying that borrowers should expect cut in lending rates following the RBI move.

BoB said it has decided “to reduce base rate by 25 basis points from 9.90 per cent per annum to 9.65 per cent” with effect from October 5. It also reduced the Benchmark Prime Lending Rate (BPLR) by 25 basis points from 14.15 per cent to 13.90 per cent.

Oriental Bank of Commerce said it has slashed its base rate by 20 basis points to 9.70 per cent with effect from today itself.

Axis Bank announced a cut of 0.35 per cent in base rate to 9.50 per cent.

With the proposed rate reduction of 0.40 per cent, SBI’s minimum lending rate would come down to 9.30 per cent — the most competitive in the market at present.

Bank of India has reduced its base rate by 0.25 per cent to 9.70 per cent, while Andhra Bank has announced a similar cut.

IDBI Bank cut its base rate by 0.25 per cent to 9.75 per cent, which would be effective from October 5.

“The reduction in interest rate is expected to positively encourage loan growth, both in the retail consumer segment, as also revitalise fixed capital formation through higher corporate sector lending, thereby supporting the growth impulses in the economy,” the bank said in a statement.

IDBI Bank has also reduced the retail term deposit rates in select buckets by 25-50 basis points with effect from October 5.

Later, Punjab and Sind Bank also said in a statement that it reduced its ‘Base Rate’ by 25 basis points to 9.75 per cent. Besides, it has also reduced its ‘Benchmark Prime Lending Rate’ (BPLR) by 25 basis points to 14.75 per cent, effective from October 5, 2015.

At least six banks announced their rate cuts today itself, in addition to announcements made by four banks earlier yesterday.

Soon after the RBI’s rate cut yesterday, Finance Minister Arun Jaitley said, “We are looking forward now to the transmission of these cuts which will effectively help to boost confidence and investment. They will also help to realise the economy’s medium term potential growth rate.”