Bangalore: The interest rate cut by State Bank of India (SBI) is giving an indication of further reduction in interest rate of other banks too. As a borrower you can drive benefits from this rate cut and take home cheaper loans, reports Madhu T from ET.

SBI, India’s largest lender, has reduced its base rate (the minimum interest rate of a Bank below which it cannot lend) and benchmark prime lending (the interest rate that banks normally charge on borrowings) rate last week. This move is likely to benefit both its existing and new customers, and other banks may follow the suit and make borrowings cheaper.

But what about the investors, will they benefit from the interest rate move? Is this the right time to lock their money in long-term fixed deposits plans at the current higher rates, or should one wait for a boost in interest rates on deposits?

"We have been maintaining that the rates will fall sooner or later. The Reserve Bank of India has indicated in its last policy that it is still concerned about inflation, so we were expecting easing of rates a little later," says D Sundararajan, Investment Consultant at Trendy Investment, a wealth management firm, as quoted by ET.

"I have been asking my clients to wait and watch. SBI's rate cuts may have more to do with their business strategy. They have access to more cheap funds than other banks and they want to attract new customers. That along with prodding by the government may be the reason behind these rate cuts. We have to wait and see what other banks are going to do," says Suresh Sadagopan, Principal Planner at Ladder7 Financial Advisories, a Wealth Management Firm, as quoted by ET.