Allahabad Bank, Uco, UBI cut lending rates

Three Kolkata-based lenders have reduced their respective base rates following a government order after Reserve Bank of India lowered its short term policy rate by 50 basis points. Allahabad Bank and Uco Bank has announced to cut the base rate by 25 basis to 10.50% while United Bank of India has lowered it by 15 bps to 10.45%.

Base rate is the minimum lending rate for banks and one percentage point is equal to 100 bps. The new rates for Allahabad and Uco Bank will come into effect from May 1 while UBI's new rates becomes effective from Monday.

Uco Bank has also slashed its housing and car loans by up to 175 bps to boost its retail lending portfolio. It cut housing loan interest rates by 175 bps across all tenures and car loan rates by 125-175 bps. The government wants state-run banks to make retail loans cheaper and compete with private lenders.

At a recent meeting with bankers, finance secretary DK Mittal told bank captains to follow this strategy. Uco Bank has cut deposit rates by 25-50 bps across various maturities from Tuesday to reduce cost of funds.

Source: EconomicTimes