South-based Federal Bank today announced a 0.25 per cent reduction in its base rate, or the minimum rate of lending, at 10.20 per cent.

The rate cut, which comes after similar calls by a slew of state-run lenders, is applicable from today itself, the bank said in a statement.

The bank also said that it will be lending "to good rated retail borrowers" for their car and home loan requirements at par with the base rate.

The country's largest lender State Bank of India has the most competitive base rates in the system at 9.70 per cent.

The state-run banks, led by SBI, had announced interest rate cuts following the Reserve Bank move to cut its key short term rate by 0.25 per cent and also the cash reserve ratio by an equal measure.

Private sector banks, including Federal Bank itself, had cut their spreads on select products, but had not cut the base rate following the RBI move.