RBI Governor Raghuram Rajan has asked banks to pass on the rate cut to customers. This mirrors his statement made on April 7, when he was severely critical of banks not passing interest rate cut to borrowers.

He had said it was "nonsense' to assume that cost of funds has not fallen and nudged them to reduce rates.He further said that sooner the banks cut rate the better it would be for the economy. He was referring to the reluctance of banks to pass on the benefit of 0.50 per cent rate cut announced by the central bank since January.


By evening, State Bank of India reduced its base rate by 15 bps, followed by private sector lender HDFC Bank. Other banks towed the line in few days. The new base rate now stands at 9.85 per cent and is effective from April 10.