SBI, Allahabad Bank cut interest rates

Mumbai, April 23 (IANS) The State Bank of India (SBI), the country's largest lender, said Monday that it will cut interest rates on term deposits by upto 1 percent.

However, the bank has not announced any change in lending rates, keeping borrowings costlier despite reduction in policy rates by the central bank.

"State Bank of India has decided to revise its retail term deposit rates across various tenors with reduction ranging from 0.25 percent to 1 percent, with effect from April 24, 2012," SBI said in a statement.

Another public sector lender Allahabad Bank said it will cut lending rates by 0.25 percent effective from May 1, 2012.

Allahabad Bank said it will cut the annual benchmark prime lending rate by 0.25 percent to 14.75 percent. The bank will also cut base rate by 0.25 percent to 10.50 percent.

Other major lenders including ICICI Bank, Punjab National Bank and IDBI Bank has already announced reduction in lending and deposit rates following cut in policy rates by the Reserve Bank of India.

Punjab National Bank, the country's second largest public sector lender, has said it will cut the annual benchmark prime lending rate by 0.25 percent to 14 percent, effective from May 1.

The bank has also decided to lower the base rate, the rate below which it can't lend, by 0.25 percent to 10.50 percent.

India's largest private sector lender ICICI Bank lowered base rate and interest rates on term deposits 0.25 percent effective from Monday.

The RBI in its annual monetary policy for 2012-13 announced on April 17, cut key policy rates by 0.50 percent. This is the first rate cut by the central bank in three years.

In order to provide additional liquidity cushion to the banking system, the RBI has enhanced the borrowing limit for banks under the marginal standing facility to 2 percent of net demand and time liabilities.