Fintotal News Analysis | SBI Lowers Base Rate
SBI Lowers Base Rate
Ruby Jacob, 20 Sep 2012

State Bank of India has reduced base rate by 25 basis points from 10% to 9.75% effective from today. 1 basis point is 1/100th of a percentage.

For a borrower lowered base rate means lower outgo on floating rate home loan, personal loan and vehicle loan EMIs. Base rate is the minimum rate below which banks cannot lend to its customers. In 2010 RBI made it mandatory for all banks to compute base rate for all floating rate loans and review it at least once every quarter.

SBI is the first bank to cut lending rates after RBI's CRR rate cut last week. Last week's CRR cut has injected liquidity to the tune of Rs 170 billion in banks. Earlier SBI chief Pratip Chaudhuri had vouched that a CRR cut was needed at the moment more than repo rate cut for overall market rates to fall.

With SBI's move its competitors are expected to follow suit.

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