First off the blocks, state-owned Allahabad Bank today cut its base rate or minimum lending rate by 0.3 per cent within hours of RBI lowering key policy rate for the third time this year. The base rate has been be reduced to 9.95 per cent from 10.25 per cent, effective June 8, Allahabad Bank said in a filing to the BSE.
Other big lenders such as Punjab National Bank, Bank of Baroda, and IDBI Bank reduced their lending rates last month. As part of its second bi-monthly monetary policy review today, RBI cut the repo rate (short-term lending rate) from 7.5 per cent to 7.25, but left all other policy tools like cash reserve requirement unchanged at 4 per cent and Statutory Liquidity Ratio (SLR) at 21.5 per cent. RBI Governor Raghuram Rajan asked banks to follow suit and pass on the rate cuts -- 0.75 per cent since January -- to individual and corporate borrowers.