India's HDFC Bank has announced a reduction of 20 basis points in its minimum lending rate, which will come into effect now.
The bank said that the base rate will now come down to 9.8 per cent, while the benchmark prime lending rate will now be at 18.3 per cent. The bank's rate will now be below that of larger banks such as the State Bank of India (SBI) that stands at 10 per cent.
The bank said that further rate cuts will come after a fall in deposit rates. HDFC has become the first leading bank to reduce rates after RBI's mid-quarter review of monetary policy during the month. HDFC has said that its net profit has risen 16 per cent to Rs1,326.14 crore in the fourth quarter compared to Rs 1,141.95 crore for the quarter till march 2011.
The better than expected figures came as the bank recorded a 20 per cent increase in demand for home loans to Rs1,40,875 crore from Rs1,17,127 crore in the year earlier. The Net interest margin of the bank remained the same as the previous year at 4.4 per cent. Gross non-performing loans amounted to Rs1,069 crore, which about 0.74 per cent of the total portfolio compared to 0.77 per cent in the previous year.
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