Citibank today became the first overseas bank in India to lower base rate, which it slashed by 15 basis points to 9.35 per cent, citing falling interest rates.
The US financial behemoth’s action comes on the heels of lending rate cuts by its domestic peers like SBI, ICICI Bank and HDFC Bank.
The new rate, effective July 1, makes it the most competitive one among large lenders.
At 9.35 per cent, the base rate is significantly lower than 9.7 per cent offered by SBI, ICICI Bank and HDFC Bank. Axis Bank’s offer comes at 9.85 per cent, which it announced last week.
Citi attributed the downward revision in the base rate, or the minimum rate of lending, to “the falling interest rates reflected in lower deposit costs”.
Since January this year, RBI has reduced the repo rate, at which it lends funds to banks, by 75 basis points but banks have passed only around 30 bps to customers so far.
SBI was the first off the block to lower base rate earlier this month (by 15 bps) after RBI Governor Raghuram Rajan, in the June 2 policy meet, asked banks to pass on the benefit to consumers.
HDFC Bank followed suit with a similar 0.15 per cent cut to 9.7 per cent and ICICI Bank brought down its rate by a marginal 0.05 per cent last week.
The South-based private lender Lakshmi Vilas Bank, too, cut its lending rate today by 0.15 per cent to 10.95 per cent, as did Allahabad bank earlier last week, reducing base rate by 0.3 per cent.