The reduction in base rate will bring down interest rate on all loans.

The revised rate, one of the lowest in the industry, became effective yesterday.

HDFC Bank had last reduced its base rate to 9.35 percent in September this year.

Base rate is the lowest lending rate below which banks do not lend to their customers.

Following the status quo by the Reserve Bank in bi-monthly monetary policy review earlier this month, HDFC Bank is the first large bank to cut base rate.

RBI left repo rate, at which it lends to the system, unchanged at 6.75 percent. The cash reserve ratio (CRR), or the amount of deposits banks park with RBI, was also retained at 4 percent.

As per the guidelines effective April 1, banks will fix their lending rates as per their marginal cost of funding every month, which will be based on the rate offered on new deposits.

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