November 9, 2008, Ratekhoj.com. IDBI Bank, a public sector bank in India, has announced in a press release that it is cutting its Bank Prime Lending Rate (BPLR) from 14.25% to 13.50% with effect from November 08, 2008. The bank announced that this reduction in BPLR will reduce its housing and education loan rates effective immediately.

This reduction in BPLR and loan rates by IDBI joins a growing list of public and private sector banks that have reduced their lending rates recently. These banks include Allahabad Bank, Bank of Baroda, Bank of India, Central Bank of India, Dena Bank, Punjab National Bank, State Bank of India, State Bank of Travancore, United Bank of India and Union Bank of India. Loans including home loans, car loans and educational loans are expected to become cheaper as we result of these cuts.

The cuts in the BPLR are a result of the Reserve Bank of India cutting its cash reserve ratio (CRR) and repo rates. These moves aimed at increasing liquidity in the credit markets and loosening the credit for borrowers has had the desired effect with both public and private sector banks cutting their lending rates.

These cuts are a boon to existing and new home loan borrowers in India. Home loans linked to a bank’s prime lending rates (typically floating rate home loans) will go down as a result of these cuts.

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