SBI cuts base rate by 25 bps, others likely to follow suit

State Bank of India on Tuesday became the first bank to reduce the lending rate by 0.25 per cent after RBI's policy announcement on September 17. Other banks are likely to follow suit and cut lending rates in the coming days.

The decision by the country's largest lender will give relief to all types of borrowers . Reserve Bank of India on Monday cut Cash Reserve Ratio (CRR) by 0.25 per cent to 4.5 per cent inducting Rs 17,000 crore into the system.

State Bank's Chairman Pratip Chaudhuri said on Tuesday, "the cut in base rate was driven largely by the RBI's decision to cut the CRR yesterday".

Soon after RBI unveiled its mid-quarter review of the monetary policy, several bankers hinted at reducing lending rates in the coming days ater the CRR cut.

Terming the policy action strongly positive for the markets, Bank of Baroda Chairman and Managing Director M D Mallya said as much as Rs 720 crore of additional fund would come to the bank.

The liquidity infusion would ensure adequate flow of credit to productive sectors of the economy, Mallya said, adding that the bank's ALCO would meet soon to take stock of the situation.

Oriental Bank of Commerce (OBC) Chairman and Managing Director S L Bansal also said that the bank would take a view on the rate revision in its ALCO meeting soon.