In its third rate cut this fiscal (20 bps in April and 10 bps in June), Axis Bank cut its base rate to 9.50 per cent from 9.85 per cent. “The new rate will be with effect from October 5, 2015″.
While the base rate cut so far has come mostly from public sector lenders, private sector players, except Axis Bank, are expected to follow suit soon.
Besides, Punjab National Bank (PNB) cut its base rate by 0.40% to 9.60%, effective from October 1.
“Median base lending rates of banks have fallen by only about 30 basis points, despite extremely easy liquidity conditions“, the governor said.
Reading the monetary policy statement, the RBI now turns its focus to working with the government in order to ensure that banks implement monetary policy in the near term.
For lakhs of consumers who have seen their Equated Monthly Installments or EMIs increase over the years, the RBI announcement comes with great expectations that just as banks transferred the burden to them, they will also pass on the benefit. All categories of loans (other than the exceptions permitted by the RBI) will be priced with reference to the revised base rate, it added.
State-run Bank of India cut its base rate by 0.25 per cent to 9.70 per cent, its peer Andhra Bank cut it by a similar measure of 0.25 per cent.
With the reduction, SBI’s base rate is the lowest in the market.
It does appear that the probability of a continual slowdown in economic growth is high in India, and so the RBI has taken the steps to promote domestic momentum within the Indian economy.
India slashed interest rates for the fourth time this year on Tuesday, a policy move aimed at shoring up economic growth in the face of rising global risks.
Reverse repo rate falls to 5.75 percent, and the marginal standing facility (MSF) rate and the bank rate to 7.75 percent.
Economists had been expecting a cautious 25-basis-point cut, but were presented with a 50-basis-point reduction.
In a big boost to the economy and borrowers, the Reserve Bank on Tuesday cut interest rate by 0.50 per cent and relaxed norms for home loan seekers. “Bank deposit rates have, however, been reduced significantly, suggesting further transmission is possible”.