Corporation Bank, Union Bank, Central Bank cut base rates

Union Bank of India and Corporation Bank are latest to trim their base rates by 15 basis points to 10.50%. On other hand, Central Bank of India on Tuesday reduced its base rate by 25 bps to 10.5%. Most banks now have a base rate of 10.50% except banks like State Bank of India and some private sector banks. Last week, ICICI Bank had cut its base rate by 25 basis points to 9.75%, whereas Punjab National Bank (PNB) and Bank of Baroda (BoB) had cut their base rates by 25 basis points to 10.5%.

"We want to align our base rate with our peers in the PSU space and we have always passed on the benefits through a base rate to our customers," said SS Mundra, executive director of Union Bank of India. The bank has reduced the deposit rates in the short maturities by 15-25 bps and in the long maturities by 25-40 bps.

Along with the base rate cut, the bank is examining the spreads in the Small and Medium Enterprises and retail loans for a possible segment-wise revision and so is home loan, where a decision is expected by the end of the month. However, Mundra said the bank's margin would continue to be range-bound with its earlier projections of between 3.15-3.20.

Ajai Kumar, CMD, Corporation Bank said, "The repo rate cut by RBI and the larger availability of funds under Marginal Standing Facility (MSF) has led us to pass on the benefits the customers. This will lead to an overall credit demand by improving the investment sentiment."

Down south, Lakshmi Vilas Bank cut term deposits between 25 and 50 bps. Other banks that have reduced lending rates since RBI announced 50 bps cut in the repo rate last Tuesday are Syndicate Bank, Oriental Bank of Commerce, IDBI Bank and Bank of Maharashtra.

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