Taking cue from the recent cuts in the policy rates by RBI, state-run banks are decreasing their benchmark prime lending rates (BPLR) and passing on the benefits to their customers.
On March 29th, two PSU banks - Central Bank of India and Andhra Bank - reduced their BPLR with effect from April 1st. Central Bank cut its rate by 50 basis points to 12% while Andhra Bank slashed its BPLR by 25 basis points to 12.5%.
The PLR cut is going to be beneficial for the banks customers as the interest rates of all the PLR related portfolios will witness a downward movement.
A spokesperson from the Central Bank of India said the reduction is anticipated to meet the credit demand of the industry.
There are other banks also that have reduced their PLR after the RBI's cut in key policy rates. For instance, Oriental Bank of Commerce (OBC), Allahabad Bank, UCO Bank and United Bank of India (UBI) have lowered their lending rates by 25-50 basis points from April 1st.
Recently RBI and the Government have been urging banks to cut their interest rates because of a decline in the cost of funds.
In fact private lenders that had been hesitant in reducing their interest rates despite of the easing monetary policy followed by the RBI have also slashed their rates now. HDFC reduced its retail prime lending rate by 50 basis points to 14% and even ICICI Bank has announced to cut its lending rates soon.