Indian banks will cut lending rates after the central bank reduced its key interest rate by 25 basis points on Tuesday, the head of industry body Indian Banks' Association, K.R. Kamath, said in a post-policy conference.

State Bank of India Chairman Pratip Chaudhuri also said banks are likely to cut lending rates.

The RBI lowered its key policy rate for the first time in nine months on Tuesday, but struck a cautious note on further easing as it waits to see how the government's upcoming budget aims to bring a bloated fiscal deficit under control.