India’s Housing Development Finance Corp (HDFC) has notified that it has slashed its retail lending rates by 50 basis points, effective Dec. 22.

According to sources, rates on fresh home loans of up to Rs 2 million ($42,370) will plunge to 10.25 percent, while those on bigger loans will attract a rate of 11.25%.

"We have been able to bring down our costs due to improved operational efficiency and good quality portfolio," Joint Managing Director Renu Sud Karnad said in the statement.

According to bank officials, the step-down will apply to all existing floating rate customers over the coming three months.

With effect from Dec. 23, the bank will also trimming deposit rates by 50 basis points across all maturities.

The Reserve Bank of India has cut its main lending rate by 250 basis points to 6.5 percent since October in an economy showing signs of slowing more than many had expected, and policy makers have urged lenders to pass on the reductions.