HDFC Bank cuts benchmark prime lending rate by 25 basis points to 15. 75 per cent

HDFC Bank, the second largest private sector lender in the country, today announced a 25 basis point reduction in its benchmark prime lending rate (BPLR) to 15.75 per cent from 16.0 per cent.

The reduction in the bank's lending rate follows a reduction in the fixed deposits rates effective 18 May.    

HDFC Bank has, over the past six months, reduced its prime lending rate by a total 75 basis points, beginning with a 50 basis point reduction in PLR from 16.50 per cent to 16.0 per cent in December 2008.    

While most corporate loans are linked to the prime lending rate, most private sector lenders often lend below PLR in a bid to boost revenues.

The Reserve Bank has, meanwhile, cautioned banks against the tendency to lend below PLR. The central bank also, last month, constituted a six-member working group to review the BPLR system and suggest an alternative mechanism for pricing floating rate loans.

HDFC Bank has, meanwhile, asked customers of erstwhile Centurion Bank of Punjab, Bank of Punjab and Lord Krishna Bank - the three banks merged with it - to switch to HDFC Bank cheques latest by 31 July.