Bank of Baroda cuts base rate by 10 basis points to 9.9 per cent

MUMBAI: Public sector lender Bank of BarodaBSE 1.55 % today cut base rate by 10 basis points to 9.9 per cent effective from July 13, 2015.

In a filing to the Bombay Stock Exchange, Bank of Baroda said that is reduced Base Rate by 10 basis points from 10.00 per cent to 9.90 per cent and also to reduce Bench-mark Prime Lending Rate (BPLR) by 10 basis points from 14.25 per cent to 14.15 per cent. The reduction in both rates will be effective from July 13, 2015.

Bank of Baroda has joined large banks including State Bank of IndiaBSE 0.43 % and ICICI BankBSE 0.62 %, which have cut their minimum lending rates to 9.7 per cent in the last few days. Earlier last month, Kotak Mahindra BankBSE -0.09 % had reduced base rate to 9.75 per cent.

Citibank had cut base rate by 15 basis points to 9.35 per cent , effective from July 1, making it the most competitive one among large lenders.

The Reserve Bank of India has been expressing its concern on poor transmission of policy rates to lending rates despite weak credit off take and the front loading of rate cuts.

Bankers expect demand for funds to improve in the second half of the financial year as some actions by the government starts playing out. Bank credit has slowed to a decade low. Credit has grown at 9.8 per cent as on May 29, 2015 while deposits have gone up by 11.5 per cent on a year on year basis.

Banks have been reluctant to pass on policy rate cut to consumers. Since the beginning of this calendar year, the central bank has reduced policy rate by 75 basis points to 7.25 per cent. But banks have lowered lending rates by only 35-40 basis points since January. Cost of funds for banks comes down with the Reserve Bank cutting rates.

Bank Of Baroda