Indian state-owned Bank of Baroda said on Monday it would cut its prime lending rate by a quarter percentage point to 10.75 per cent from June 1.

The bank said in a statement it had also cut its short-term prime lending rate by a quarter percentage point to 10 per cent and the rate on loans with maturities of more than a year by the same magnitude to 11.5 per cent.

The prime lending rate is the rate that banks charge their blue-chip borrowers.

The announcement comes almost a week after the country's central bank cut the key bank rate -- used by banks to price loans -- by a quarter percentage point to six per cent.

The central bank also cut the cash reserve ratio by the same magnitude to 4.5 per cent, effective June 14.

India's largest commercial bank, the State Bank of India, subsequently announced it would cut its lending and deposit rates by a quarter point with effect from Monday.

Bank of Baroda also lowered deposit rates across short-term maturities by a quarter percentage point, although it raised rates by a quarter to a half percentage point at the longer end.

It will now offer six per cent on deposits with maturities of three years or more, compared with 5.5 per cent earlier, while for deposits with maturities of 15 to 45 days it will offer 4.25 per cent, down from 4.5 per cent earlier.

The bank, which had assets of 709 billion rupees and deposits of 618 billion as on March 31, 2002, is among the leading state-run banks, which dominate the sector with a share of 70 per cent share of the business.

BoB's shares were up 2.88 per cent in afternoon trade, while the benchmark 30-share index was up 0.60 per cent.

Reuters