HDFC Bank has decided to cut its benchmark lending rate by 0.2%, making loans cheaper for borrowers.

The base rate, or the minimum lending rate, of HDFC Bank will become 9.8% from the existing 10%, sources said.

At the same time, the benchmark prime lending rate (BPLR) of the country's second largest private bank is expected to be slashed by similar percentage points to 18.30%.

The new rates would be effective from tomorrow, sources added.

HDFC Bank has become the first bank to cut lending rate after RBI's mid-quarter review of monetary policy which kept all policy rates unchanged earlier this month.

While the short-term lending rate (repo) has been kept unchanged at 8%, the CRR, portion of deposits banks are required to park with the RBI, will be 4.75%.

Most of the banks after June 18 policy announcement have hold on to both lending and deposit rates.

However, State Bank of India yesterday announced cut in export credit by 0.5% within days of the Reserve Bank increasing the export refinancing limits of banks.