SBI is the first bank to cut its base rate after the RBI today decided to maintain status quo on policy rates due to the fact that commercial banks hadn’t transmitted the impact of the previous two rate cuts earlier this year into their lending rates.
India’s largest lender State Bank of India (SBI) today cut base rate by 15 basis point to 9.85 effective April 10.
Base rate is the minimum rate the RBI charges while lending to its customers and the minimum interest rate of a bank below which it cannot lend, except in cases allowed by the central bank.
SBI is the first bank to cut its rates today, just a few hours after the RBI decided to maintain status quo on policy rates due to the fact that banks hadn’t transmitted the impact of the previous two rate cuts earlier this year into their lending rates.
In its policy statement the RBI today said: Transmission of policy rates to lending rates has not taken place so far despite weak credit off take and the front loading of two rate cuts. With little transmission, and the possibility that incoming data will provide more clarity on the balance of risks on inflation, the Reserve Bank will maintain status quo in its monetary policy stance.
In an interview to CNBC-TV18, SBI chairperson Arundhati Bhattacharya said the time is right for the rate cut and the bank is contemplating cutting the deposit rate for 1-year bucket.