Rate cut of SBI ,HDFC Bank & RBI Policy

India’s largest lender State Bank of India (SBI) and HDFC Bank today cut base rates by 15 basis points to 9.85 percent effective April 10 and April 13 respectively.On Tuesday, the Reserve Bank of India nudged banks to cut rates while leaving the policy rate unchanged. The Reserve Bank of India (RBI) today decided to leave interest rates unchanged when it met for a bi-monthly review, after effecting two out-of-cycle rate cuts earlier this year for 25 basis points (0.25 percent) each. As a result, the headline repo rate, the rate at which the RBI lends to commercial banks, continues to stand at 7.5 percent.
Base rate is the minimum rate the RBI charges while lending to its customers and the minimum interest rate of a bank below which it cannot lend, except in cases allowed by the central bank. The country’s largest lender SBI, has reduced its base rate by 15 basis points (bps) just hours after Reserve Bank of India (RBI) nudged banks to cut rates while leaving the policy rate unchanged SBI is the first major bank to cut its base rate. One basis point is one-hundredth of a percentage point. SBI reduced its minimum lending rate or base rate by 15 bps to 9.85% effective 10 April. This is the first such cut by the lender since February 2013 when it had reduced its base rate to 9.7% from 9.75%. It has since consistently been raising its base rate. India’s second largest private sector lender HDFC Bank too cut its base rate by 15 bps effective 13 April.