On Tuesday, banks slashed the lending rates starting with State Bank of India, followed by HDFC and ICICI Bank.
The Reserve Bank of India on Tuesday kept its key policy rates and the reserve ratios unchanged.
RBI had cut repo rate twice this year, once in January and again in March by 25 bps both the times, but banks where reluctant to pass the benefits.
This move came after the RBI credit policy, where Raghuram Rajan asked the banks to pass the benefits to the customers.
India's largest lender State Bank of India (SBI) cut base rates by 15 basis points to 9.85 per cent which will be effective from April 10 and April 13 respectively. SBI was the first to take the step to cut its base rate.
In private banks, HDFC Bank slashed base rates by 15 base points to 9.85 per cent which will be effective from April 13. Also, it cut some deposit rates by 25 bps.
While, ICICI Bank slashed by 25 base points to 9.75%, offering the lowest. ICICI bank also reduced the deposit rates by 25 base points for the deposit upto 1 crore.
Axis bank cut the base rate by 20 basis points to 9.95%.
While, this move will benefit borrowers as loans and EMI will be smaller. But small savers and pensioners are going to be hit badly due to fall in deposit rates.