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Karnataka Bank lowers base rate by 25 bps

Karnataka Bank has reduced its base rate by 25 basis points to 10.75%, with effect from November 10.

Karnataka Bank has reduced its base rate by 25 basis points (bps) to 10.75%, with effect from November 10.

In a notice to the Bombay Stock Exchange (BSE), the bank said that the reduction is applicable to the existing loans and also for the future loans. The private bank also lowered deposit rates on one to five-year deposits by 25 bps to 9%, it said. This is the first base-rate cut since Reserve Bank of India’s second monetary policy review on October 30.

The private sector lender has also cut interest rate on housing and car loans by 50 bps, to boost its retail portfolio. Home loans up to R25 lakh will be extended at 10.75% annually, while interest rate car loans now stands at 11.25%. Other bankers, though, are terming this as a move to rationalise rates and bring it closer to leading players.

“The communication to us from the finance ministry has been to reduce lending rates, however, we will have to think how to go about it,? said the executive director of a leading public sector bank, requesting anonymity. After RBI?s second quarter monetary policy review, bankers had agreed that a 25 bps reduction in cash reserve ratio (CRR) would be too less for any base rate cut.

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First published on: 16-11-2012 at 03:18 IST
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