Today, the country’s second largest private sector lender HDFC Bank lowered prime lending rate (PLR) 50 basis points and state-owned Union Bank 75 basis points to 12.5 per cent. It comes just two days after the Reserve Bank of India (RBI) announced 100-basis point cuts in key lending rates.

It was informed by HDFC Bank that its benchmark prime lending rate (BPLR) will fall to 16 per cent in two stages. From 15th December, the 25 basis point reduction will come into effect and from 1st January, 2009, a similar cut will also come into effect.

HDFC Bank Executive Director Paresh Sukthankar informed via a statement, “The drop in the PLR follows the reduction in the bank’s incremental cost of funds and the significant easing seen recently in the monetary stance and the local currency money markets.”

A call on cutting rates will be taken by other banks, including State Bank of India, Bank of Baroda and Uco Bank later this week.

“The bank’s asset liability committee (Alco) is meeting on December 12 to decide rate cuts,” said Uco Bank Chairman and Managing Director S K Goel.

He added, “We are planning to reduce the PLR 50 to 100 basis points, and deposit rates may fall by around 50 basis points.”