Bank of India cuts lending rate by 0.25%

State-run Bank of India today announced a 0.25 percentage point reduction in its benchmark lending rate to 9.95 per cent from the existing 10.15 per cent.

"The Bank has decided to reduce its Base Rate by 25 basis points to 9.95 percent (from existing 10.20 percent) w.E.F. May 4, 2015," the Bank of India said in a BSE filing.

This will make all retail loans linked to the benchmark rate, including auto, home and other loans, cheaper.

The new rate is applicable from 4 May, Bank of India said in a release.

Major lenders, including market leader State Bank of India (SBI) and private sector lenders like ICICI Bank and HDFC Bank have already reduced lending rates by 0.15 to 0.25 per cent on RBI's insistence.

RBI Governor Raghuram Rajan had last month said lenders are refusing to pass on the policy rate cuts and it would think of another rate cut only after it was satisfied that banks are passing on benefits of low interest rate.

The RBI had reduced the policy rate by 0.5 percentage point in two tranches since January, but banks remained reluctant to cut lending rates, still claiming that cost of funds has gone up.