Taking a cue from RBI easing of policy rate, state-owned United Bank of India today slashed its base rate or the minimum lending rate by 0.25 per cent to 10 per cent.
"It has been decided by the asset liability management committee on January 15, that the base rate of the bank will be reduced from 10.25 per cent to 10 per cent effective February 1," United Bank of India said in a statement.
Many other banks may also follow suit in the days to come.
With the reduction in the base rate, all kinds of loans including housing and auto loan are expected to become cheaper.
Kolkata-based lender became the first bank to pass on the effects of easing of monetary stance by the RBI to its customers.
The announcement came within hours of RBI reducing the benchmark interest rate by 0.25 per cent to 7.75 per cent with a view to boost growth.
The rate cut by RBI came after a gap of over 20 months. The RBI had last reduced repo rate by 0.25 per cent in its May 3, 2013 policy review.
Reacting to the rate cut by the central bank, SBI Chairperson Arundhati Bhattacharya said it was very difficult to talk about the timing of reduction in interest rate by her bank as of now, but "We can expect cutting lending rates in the coming days".
Echoing similar view, Bank of Maharashtra Chairman Sushil Muhnot said many banks would now look at easing interest rates.
The bank is looking at select sectors like MSME to reduce spread, he said.
