Taking cue from their public peers, private sector lenders too are coming forward with the rate cut. The country's third largest private lender, Axis Bank has slashed its benchmark prime lending rate (BPLR) by 50 basis points to 15.25% with effect from April 1st.

The bank has managed to reduce the rate at the back of falling cost of funds in the past few months. "Interest rates in the system have come down and so have our cost of funds. So, we have decided to pass on the benefits to our customers," said Partha Mukherjee, President (Credit) of Axis Bank.

The reduction in the PLR is going to be valid for all PLR-linked floating rate loans extended to existing as well as new customers of the bank.

However the home loan and auto loan borrowers will not be benefited from this cut.

The move by Axis bank seems to be making a way for private lenders that will soon be noticed reducing their interest rates.

Recently even Bank of Rajasthan has also revised down its BPLR by 25 basis points to 9.75%. HDFC too slashed its retail prime lending rate by 50 basis points to 14%.