HDFC Bank, the second-largest private sector lender in India, has announced its decision to slash its base rate by 10 basis points to bring it down to 9.7 per cent, from Tuesday, January 1, 2013.

From the start of the New Year, HDFC Bank will offer the lowest base rate among all major lenders, including public sector lender State Bank of India (SBI) and private sector lender ICICI Bank, both of which have base rate of 9.75 per cent.

It may be noted here that the base rate is the yardstick to which rates of all types of loans are linked.

HDFC Bank will also drag down its benchmark prime lending rate by 10 basis points to 18.2 per cent. Last time, the bank had slashed the benchmark lending rate cut on June 30 by 20 basis points.

HDFC Bank Executive Director Paresh Sukthankar said, "For us, this is the second cut from the peak and consistent with the movement in deposit rates and the cuts in the cash reserve ratio."

HDFC Bank is the first major lender to announce a cut in its benchmark loan rate before the Reserve Bank of India's (RBI's) third quarter monetary policy review, which is scheduled for January 29. The RBI is widely expected to hack interest rates to provide a much-needed boost to the country's economy.

The private sector lender has also revised fixed deposit (FD) rates on select maturities from mid of December. Recently, it had pocketed nearly Rs 1,400 crore from bonds to fund its business growth.