HDFC Bank cuts rate by 0.5 percent

New Delhi, Dec 19 (IANS) HDFC Bank Friday announced a reduction in its retail prime lending rates by 50 basis points (0.5 percent) for its new as well as existing customers, which will be effective by Dec 22, 2008.

'As in the past, HDFC has ensured that reduction in the cost of its resources translates into a benefit in terms of lower costs for both existing and new customers. HDFC continues to efficiently manage its liabilities and reprice its debts,' Renu Sud Karnad, HDFC joint managing director said.

'The advantage of a cut in RPLR will accrue to all the existing floating rate customers over the period of next three months based on their respective reset dates. Similarly, the rates of interest on loans to NRIs have also been reduced,' HDFC said in a statement.

'The recent cuts in policy rates by the Reserve Bank of India has created adequate liquidity in the banking system which had a positive impact on the cost of funds. The sharp fall in inflation is an indication that the interest rates are likely to have a downward bias,' Karnad added.

HDFC will also reduce its deposit rates by 50 bps across all maturities effective Dec 23, it said. On an incremental basis, retail deposits for the first seven months - April to October - formed 62 percent of HDFC's funding requirement.