The new rate is effective April 10. SBI Chairman Arundhanti Bhattacharya said other lenders should follow the move and lower their rates. She also hinted at lowering of deposit rates going forward.
The surprise cut came after Bhattacharya earlier today sought to defend banks not lowering rates despite two successive easing of monetary policy by the RBI since January.
SBI cut minimum lending rate or base rate by 15 basis points to 9.85 percent, making it the cheapest source of funds in the industry.
In a post policy meeting with the reporters here, Bhattacharya, however, said: "You have to understand both ways it takes a little time for the things to pass through. And, it is not only the cost of deposits that determines this, the passing through is also determined by the amount of liquidity, the amount of credit demand and competition which also drives rates up or down.
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There are very many factors and repo is only one of the factors."
However, very few of the lenders have lowered their base rate.