State Bank of Mysore (SBM), an associate of State Bank of India, has slashed the minimum lending rate by 0.10 per cent to 9.90 per cent.
Private sector lender HDFC Bank recently reduced its base lending rate to 9.35 per cent. This left industry observers worried that the it could trigger a lending war in the industry.
The Reserve Bank of India has been nudging banks to lower their interest rates as the central bank had cut the repo rate by 75 basis points already this year.
The RBI will announce its next bimonthly monetary policy on September 29. It is believed that the RBI would cut rates in its policy meet after WPI and CPI inflation came in sharply lower for the month of August 2015.