New Delhi: State-run lender Bank of India Monday announced a reduction in its base rate -- yardstick for pricing all loans -- and benchmark prime lending rate (BPLR) by 25 basis points each with effect from May 1, 2012, following the Reserve Bank of India's (RBI) decision to slash the key policy rate by a higher-than-expected 50 basis points earlier this month.
Following the reduction in the lending rates, the bank's base rate will fall to 10.5% from 10.75% earlier and BPLR will decrease to 14.75% from 15% at present, Bank of India said in a filing to stock exchanges.
Other state-run lenders like Indian Overseas Bank, Oriental Bank of Commerce, Punjab National Bank, Bank of Baroda, IDBI Bank, Syndicate Bank and Bank of Maharashtra, and private sector lenders ICICI Bank, Federal Bank and Kotak Mahindra Bank have also announced reduction in their lending rates following the RBI's move.
State-run lender IDBI Bank was the first to cut its base rate and BPLR following the RBI's decision.
Earlier this month, the RBI cut the repo rate -- short term lending rate -- by a sharper-than-expected 50 basis points for the first time since 2009, to support India's faltering economic growth, keeping in view the slowing down in demand which has led to a significant moderation in inflation.
The repo rate cut marked the central bank's reversal in its tight monetary policy stance maintained for three years to tame stubbornly high inflation.
Earlier, the RBI had raised the repo rate by 375 basis points in 13 sequential steps between March 2010 and October 2011, until it pressed the pause button on rate hikes in its December 16 mid-quarterly monetary policy review to address concerns about deteriorating economic growth.
Shares of Bank of India Monday ended at Rs 352.85 on the Bombay Stock Exchange, up 4.59% from the previous close.