Two days after the he Reserve Bank of India (RBI) reduced repo rate by 0.5 percentage points, two major banks — ICICI Bank and Punjab National Bank (PNB) — on Thursday announced deductions in lending rates. Both banks have also slashed interest rate on fixed deposits.
The move which will result in lower home, education and auto loans rates for existing and new customers.
“With the easing of systemic liquidity, we have already seen some correction in wholesale deposit rates,” said Chanda Kochhar, managing director and chief executive, ICICI Bank. “We expect the cost of funds to gradually come down and this reduction in lending rates is a proactive move by us to pass on the benefit to our valued customers.”For ICICI Bank customers, the rate cut will be effective from April 23 while PNB customers will get the benefit of lower rates from May 1.
While the base rate for ICICI Bank stands at 9.75%, India’s second-largest public sector lender PNB’s base rate stands at 10.50%.
With effect from July 1, 2010, interest rate on new loans and advances is determined with reference to the base rate, for loans sanctioned before July 1, 2010 the interest is linked to the benchmark prime lending rate (BPLR). Both lenders have also lowered BPLR by 0.25 percentage points.
ICICI Bank has slashed interest rate on fixed deposits by 0.25 percentage points while PNB has cut rates up to 0.50 percentage points.
Mid-sized lender IDBI Bank on Wednesday announced a 0.25 percentage point cut in lending and deposit rates.