Banks have started announcing reduction in their lending rates after the RBI Governor Raghuram Rajan said the banks should pass through the sequence of rate cuts into lending rates. With today's 25 basis points cut, the RBI slashed interest rates by 75 basis points this year.

State Bank of India reduced base rate by 15 basis points to 9.7% from 9.85% earlier. It will be effective from June 8. Reduction in base rate will not hurt bank's margin, SBI said.

Dena Bank announced 25 basis points reduction in base rate to 10% from 10.25% earlier. It will be effective from June 8.

Meanwhile, Punjab and Sind Bank slashed base rate by 25 basis points to 10% from 10.25% earlier. It will be effective from June 3. 

Commenting on the RBI policy, Arundhati Bhattacharya, chairman, SBI said, 'The decision to cut repo rate is welcome and timely. With credit demand expected to perk up, we anticipate the rate cut will transmit through the banking system sooner than later.

With monsoon forecast going a little awry and the RBI upping its inflation projections for March FY16, the Government should now push for more public infrastructure spends that would support growth in the near term and create more jobs.'

Other banks expected to follow suit and announce reduction in interest rates in the near-term. 

The RBI on Tuesday reduced repo and reverse repo rate by 25 basis points to 7.25% and 6.25% respectively. On the other hand, the central bank kept cash reserve ratio (CRR) and statutory liquidity ratio (SLR) unchanged at 4% and 21.5% respectively.