Banks Cut Lending and Deposit Rates by Reduction in Policy Rates by RBI

Good news for loan borrowers! A series of rate cuts are on the way as the banks start cutting their lending rates by following Reserve Bank of India (RBI) policy rate cuts. Both public and private sector banks are reducing their lending and deposit rates from Wednesday, 18th April. The RBI reduced repo rate by 50 bps to 8%. This resulted in reducing home, auto, education, personal loan rates for new and existing borrowers. Simultaneously, banks are also reducing their retail term deposit rates.

The IDBI bank on 18th April announced rate cuts of up to 0.5% in lending and deposit rates. It had cut the retail term deposit rates by 10-50 bps. This is the first bank to bring down lending rate to 10.50% and will be effective from April 20.

Following the move, the country’s largest private lender ICICI bank has reduced lending rates by 25 basis points. The bank’s so-called base rate (i.e., rate below which bank can’t lend) has reduced to 9.75% from 10%. Also, the deposit rates on retail fixed deposits for various tenors reduced by 25 bps. Both the rates will be effective from April 23.

The Punjab National bank has reduced the interest rates on term deposits of selected tenors and selected maturity buckets by 25 bps to 50 bps. The bank has also cut its base rate by 25 bps to 10.5%.

Bank of Maharashtra has also decided to lower its base rate by 10 bps to 10.50% from 10.60%. Thus, more public sector as well as private sector banks are following the lending and deposit rate cuts. Banks like SBI, HDFC and many more have decided to cut rates in similar lines.

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