State-run Dena Bank on Thursday reduced its base rate, or minimum lending rate, by 0.30 percent to 9.70 percent from 10 percent earlier. The new base rate will be applicable from October 5. "Almost 80 percent of our advances are linked to base rate so there would be an impact of 20-25 basis points on our margins," the bank's Executive Director R K Takkar said.
However, the lender is planning to reduce its deposit rate at a later stage which will help in offsetting loss in margins, he added. Earlier in the day, private lender Kotak Mahindra Bank slashed its base rate by 0.25 percent to 9.50 percent, effective October 5. A number of lenders, including the country's largest State Bank of India, PNB, IDBI Bank, Bank of Baroda, Bank of India and Axis Bank reduced their base rate after RBI on September 29 effected a 50 basis points cut in repo rate.
SBI, Andhra Bank and Bank of India were among the first to cut base rate in the range of 0.20-0.40 percent in response to RBI's surprise action.
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