HDFC Bank cuts lending rates by 0.1%
MDT/PTI 31 December 2012

Minimum lending rate, of HDFC Bank will come down to 9.7% from the existing 9.8% thus making loans cheaper for borrowers in new year

New Delhi: HDFC Bank has decided to cut its benchmark lending rates by 0.1%, making loans cheaper for its borrowers in the New Year, reports PTI.


The base rate, or the minimum lending rate, of HDFC Bank will become 9.7% from the existing 9.8%, sources said.


At the same time, the benchmark prime lending rate (BPLR) of the country’s second largest private bank is expected to be slashed by a similar margin to 18.20%.


The new rates would be effective from 1 January 2013, sources added.


HDFC Bank has become the first bank to cut lending rate ahead of Reserve Bank of India (RBI)'s quarter review of monetary policy on 29 January 2013. RBI has already indicated that it will consider reducing interest rate in the January review.


The central bank is closely monitoring the evolving growth-inflation dynamics and would update projections for 2012-13 in the third quarter review, RBI had said.


Looking forward, the central bank said, "the emerging patterns reinforce the likelihood of steady moderation in inflation going into 2013-14, though inflation may edge higher over the next two months".


The RBI in its December review left the short-term lending (repo) rate and the Cash Reserve Ratio (CRR) unchanged at 8% and 4.25% respectively.


The reverse repo, at which RBI absorbs excess liquidity through borrowings from banks, remained static at 7%.


HDFC Bank last reduced the benchmark lending rates by 0.2% in June.


Meanwhile, the bank also revised fixed deposit rates on select maturities from 15 December 2012.


Earlier this week, HDFC Bank raised about Rs1,400 crore from bonds to fund its business growth. The bank has allotted lower Tier II bonds for an amount aggregating Rs1,405 crore.


The bonds in the nature of debentures where issued on a private placement basis to investors.

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