More banks follow State Bank, cut lending rates

New Delhi, Dec 22 (IANS) Three state-owned banks – Bank of India, Bank of Baroda and Canara Bank – took the cue from leader State Bank of India (SBI) to cut prime lending rates (PLR) Monday from the existing 13.25 percent to 12.5 percent from Jan 1.

Prime lending rate is the rate at which bank gives money to its top customers.

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The three banks will also lower deposit rates from the New Year by 50 to 100 basis points.

SBI, the largest bank in the country, Saturday announced a cut in interest rates on loans and deposits following the central Reserve Bank of India’s (RBI) decision to reduce repo rate to 6.5 percent.

Repo rate is the rate at which banks borrow from the central bank.

Home Minister P. Chidambaram also said in parliament Dec 18 that banks had to pass on the benefit to borrowers following the RBI lowering lending rates.

Bank of Baroda touched an intra-day high of Rs.287.45 following the announcement, but closed lower at Rs.276, while Bank of India, which had touched a high of Rs.309, closed at Rs.297.30.

Canara Bank closed at Rs.196 after touching a high of Rs.202.50.

Private players are yet to copy their public sector counterparts and some are still charging a high PLR.