New Delhi: In what could be a new year bonanza for borrowers, banks have reduced average lending rates by 0.25-0.50 per cent from today (Jan 1, 2004) despite Reserve Bank of India (RBI)'s unwillingness to revise downwards its refinance rate.

After RBI and Indian Bank Association's decision to introduce benchmark prime lending rate (BPLR) from January 1, major banks have slashed rates in accordance with their cost of funds, cost of operations, NPAs (Non-Performing Assets) and profit margins.

State Bank of India led the chart with the lowest BPLR of 10.25 per cent, which is 0.25 per cent lower than its previous PLR, mainly on the strength of lower cost of funds.

SBI's close competitor in the private sector, ICICI Bank, re-christened its PLR as I-BAR (ICICI Bank Advance Rate) but kept it unchanged at 10.50 per cent.

Other major banks like Canara Bank, Punjab National Bank, Bank of Baroda and Union Bank reduced the lending rates by 0.25 per cent each.

BoB (Bank of Baroda) cut its lending rate to 10.50 per cent while Union Bank, PNB (Punjab National Bank) and Canara Bank pegged their BPLR at 10.75 per cent.

Central Bank, Indian Overseas Bank, Allahabad Bank and Dena Bank reduced lending rates drastically by 0.50 per cent but their BPLR was still higher at 11 per cent.

Although other banks are yet to announce their BPLR, banking sources said the average lending rates have come down by 0.25-0.50 per cent.

While reducing lending rates, some of the banks, including SBI, have also slashed term deposit rates.

The reduction in lending rates comes despite RBI's stance to maintain its Bank Rate at 6.0 per cent since April 2003.