The State Bank of India, the country's largest lender, will review interest rates further following today's reduction in the Reserve Bank's policy rates, chairman O P Bhatt said.

Addressing a function to mark the opening of SBI's 11,111 branch in Guwahati, ahead of RBI's announcement of rate cuts, Bhatt had said, "Depending upon what signals come from RBI and how strong it is, we will definitely review our rates, both on the lending side as well as the deposit side in our assets and liability committee, and as we have done in the past, we will take a lead position on this also."

The RBI today slashed both the repo rate (at which it lends money to banks), and the reverse repo rate (the rate at which banks park their fund at RBI) – by one percentage point each to 5.5 per cent and 4.0 per cent, respectively.

The central bank also cut the cash reserve ratio (the minimum amount that banks should to keep with RBI), by 50 basis points to 5.0 per cent from the fortnight beginning 17 January 2009.

SBI had reduced its benchmark prime lending rate (SBAR) by 75 bps from 13.00 per cent to 12.25 per cent with effect from 1 January 2009.

The reduction will be applicable to all existing and new floating rate loans, including housing loans, based on the prime lending.

SBI also has effected a 0.25-1 percentage point reduction in its deposit rates across various maturities.

Deposits of 1-2 year maturity would now attract an interest rate of 8.5 per cent as against the earlier 9.5 per cent, while deposits having two years to less than 1,000 days maturity will attract interest rate of 8.75 per cent against the earlier 9 per cent.

The 1,000-days special deposit scheme, which had offered 10 per cent rates earlier, will also now give 9 per cent return.