Banks have been quick in passing on the benefits of yesterdayâ€™s rate cut to the consumers. Surprising many, the Reserve Bank of India reduced the repo rate by 50 basis points (100 basis points is equal to 1%) to 6.75%.
Post the rate cut by RBI, Finance Minister Arun Jaitley said that the government was looking forward to the transmission of these cuts which will help boost the confidence of the investors and investments alike.
Public sector banks responded by cutting their base rate with State Bank of India (SBI), the largest public sector bank, taking the lead. Within hours of RBIâ€™s announcement, SBI slashed its base rate by 40 basis points to 9.30%, the lowest base rate among all banks. Many banks followed suit and cut their base rates. Andhra Bank reduced its base rate by 0.25 basis points to 9.75%. Another public sector lender and SBI associateâ€” State Bank of Travancoreâ€” announced a reduction of 20 basis points in its base rate, bringing the rate down to 9.95%.
However, none of the private sector banks have cut their base rates yet.