State Bank of India, the country's top lender, has cut its key lending rate, or base rate, by 5 basis points, R. Venkatachalam, deputy managing director at the bank, said on Wednesday.
The base rate now stands at 9.7 percent and will be effective Feb 4, the bank said in a statement.
The Reserve Bank of India cut a key policy rate by 25 basis points on Tuesday to help support an economy set to post its slowest annual growth rate in a decade.
"It worked out to only 5 basis points. We are passing on the entire benefit," Venkatachalam said.
The base rate is the rate of interest below which banks cannot lend to its customers. A cut in the base rate implies that all borrowers, both existing and new, will benefit from lower rates. Borrowers pay interest a few percentage points higher than the bank's base rate.
SBI is the third bank to lower the base rates after the RBI on Tuesday cut