State Bank of India (SBI), the country's largest lender, on Wednesday slashed its base rate by a quarter of a percentage point, in a move that will alleviate burden on all borrowers.

SBI slashed base rate by 25 basis points, from 10 per cent to 9.75 per cent per annum. The country's largest lender announced the decision just a day after the Reserve Bank of India (RBI) hacked cash reserve ratio (CRR) by 25 basis points.

A spokesperson for SBI said, "All the existing as well as new customers for home loans, car loans and all other loans which are not fixed, will benefit from this cut."

The small cut by SBI will help all borrowers, including home buyers and car buyers, a lot. A 25 basis points decrease in home loan rate of twenty-year tenure can trim down the EMI by around Rs 17 on Rs 1 lakh loan. In means, a subscriber to Rs 30 lakh loan of twenty-year tenure will get annual savings of around Rs 6,100.

SBI Chairman Pratip Chaudhari admitted that the decision would make the lender to suffer a decline of Rs 1,200 crore in revenue, but underlined that it was crucial for the growth of loan and credit in the country.

As SBI is the largest player in the banking sector in the country, it most recent decision is expected to pressurize other banks to slash their rates.