ICICI Bank cuts base rate by 25 bps

Private sector lender ICICI Bank cut its base rate by 25 bps on Tuesday, after RBI governor Raghuram Rajan termed as "nonsense" the banks' refusal to pass on benefits on grounds of high cost of funds in the monetary policy review.

Base rate is the rate below which a bank cannot lend. The bank cut its base rate to 9.75 per cent with effect from April 10.

Earlier in the day, State Bank of India and HDFC Bank cut their base rate by 15 bps each to 9.85 per cent.

"I do not see an environment where credit growth is tepid, banks are sitting on money and their marginal cost of funding (has) fallen, the notion that it hasn't fallen is nonsense, it has fallen," Rajan said during the first monetary policy review of current fiscal.

Promising an "accommodative monetary policy", he indicated rate cuts going forward depending on favourable macro economic data and whether banks pass on the benefits of two rate cuts so far this year.

RBI maintained status quo on fears of unseasonal rains impacting food prices.

The repo rate, at which the Reserve Bank of India lends to the banking system, will continue to be at 7.5 per cent and the cash reserve ratio, which is the amount of deposits parked with the central bank, will remain at 4 per cent. Bank rate has also been retained at 8.5 per cent.