The base rate now stands at 9.7 per cent and will be effective February 4, the bank said in a statement.
"It worked out to only 5 basis points. We are passing on the entire benefit," Venkatachalam said.
The base rate is the rate below which a bank cannot lend. A reduction in the base rate is likely to bring down loan rates as well.
IDBI Bank and Royal Bank of Scotland were among the first banks to cut lending rates yesterday after the Reserve Bank of India cut the repo rate and the cash reserve ratio (CRR) by 25 basis points each.
Earlier today, HDFC Bank cut car loan rates by up to 0.5 per cent.
The repo rate is the rate at which the central bank lends short-term money to commercial banks, while the CRR is the proportion of money banks have to park with the RBI. Banks don't earn interest on this money.
The relaxation of the CRR has infused Rs 18,000 crore into the system.
The repo rate is now 7.75 per cent, while CRR stands at 4 per cent.
With inputs from Reuters