A day after the Reserve Bank of India (RBI) cut its key interest rates, two public sector banks – Bank of Baroda (BoB) and Union Bank of India – cut their benchmark prime lending rates (BPLRs) by 50 basis points to 12 per cent.
But the benefit will accrue to customers only in the next financial year since the new rates will be effective from April 1.
Currently, the prime lending rate of the country’s largest lender – State Bank of India (SBI) – is 12.25 per cent, or 25 basis points higher than the revised rate of BoB and Union Bank. SBI had slashed its PLR by 75 basis points to 12.25 per cent from January 1, 2009.
A Union Bank executive said that its decision was taken in response to the RBI’s cuts in repo and reverse repo rates.
| BUT BANKS LOWER RATES MARGINALLY | ||
| Banks | Benchmark Prime Lending Rate (%) | |
| Oct-08 | Now | |
| HDFC* | 15.00 | 14.50 |
| HDFC Bank | 16.50 | 16.00 |
| ICICI Bank (I-BAR) | 17.25 | 16.75 |
| ICICI Bank (FFR) | 14.25 | 13.75 |
| PNB | 14.00 | 11.50 |
| SBI | 13.75 | 12.25 |
| BoB** | 14.00 | 12.00 |
| Union Bank** | 14.00 | 12.00 |
| FFR : Floating Reference Rate; I-BAR : Benchmark Advance Rate,* Retail rate, **Effective April 1, 2009 Source :BSE & banks’ websites | ||
“Our decision will reduce the interest burden in all BPLR-linked advances of the bank,” he added. The bank has now reduced its PLR in four tranches from 14 per cent as of November 2008 to 12 per cent at present.
Meanwhile, Mumbai-based public sector bank Bank of Baroda (BoB) cut its BPLR by 50 basis points to 12 per cent. The bank’s chairman and managing director M D Mallya said: “Our board, which met in Delhi today, approved the proposal to cut BPLR by 50 basis points to 12 per cent from April 2009”.
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The bank has also decided to reduce its deposit rates by 50-75 basis points across all maturity buckets. The new deposit rates will also come into effect from April.
“The bank will be able to maintain interest margin in 2009-10,” Mallya added.
ICICI Bank executive director V Vaidyanathan said RBI’s decision to cut repo and reverse repo rate will help reduce deposit and lending rates.
However , an SBI official said the RBI’s monetary action would not have any distinct immediate impact.