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SBI cuts base rate by 0.


MUMBAI: Country's largest lender State Bank of India (SBI) on Wednesday cut lending rate by 0.05 per cent, a day after the Reserve Bank cut its key policy rates. After this marginal reduction, SBI's base rate, or the minimum rate of lending, will come down to 9.70 per cent from 9.75 per cent effective February 4. "Through this reduction, we are passing on a little more than what we gain through the rate cut by the Reserve Bank," a senior SBI official told this evening, after a meeting of the bank's Asset Liability Committee (ALCO).

The old benchmark prime lending rate will also go down by a similar 0.05 per cent, he said. The bank has not cut deposit rates as the ALCO felt its offering is among the lowest in the market at present, the official said. SBI, which has one of the most aggressive offerings among domestic banks, had last cut its base rate by 0.25 per cent in September, 2012.

The official said SBI is gaining "around Rs 275 crore and passing around Rs 350 crore... this will have a very negligible impact on our margins". The bank will earn around Rs 225 crore by deploying the additional Rs 2,780 crore funds which get released due to the 0.25 per cent CRR cut.

The Reserve Bank yesterday cut its short-term lending rate by 0.25 per cent and also reduced the CRR by a similar amount to ease the strained liquidity conditions.