Thanks to a volatile stock market, and the tailwind provided by the 2-2.5 per cent interest rate hike last year, which had also led to corresponding increases in interests banks paid on fixed deposits, there is no shortage of funds - liquidity in bankerspeak - in the system.

On a year-on-year basis, deposits grew by 29.5 per cent till January 25, as against the 23.5 per cent last year At the same time, credit offtake grew at a tad over 22 per cent, compared to the near-30 per cent growth the previous year, according to data released by the Indian Banks Association.

For SBI, this is the second cut in less than 10 days. The bank had announced a quarter per cent cut on February 11, which kicked in on February 16.

"The benchmark PLR is revised downward by 0.25 percentage point from 12.50 per cent to 12.25 per cent with effect from February 27," SBI informed the BSE in its notification.

Moreover, Bank of India and Union Bank also announeed cut their prime rates by 0.5 percentage points to 12.75 per cent on Wednesday Bangalore-based Canara Bank also cut its rate by 0.25 percentage points to 12.75 per cent.

With home loan major HDFC having already reduced its prime rate by 0.25 percentage points effective February 1, and PNB Housing Finance slashing rates by 0.5 per cent, the flagging real estate and automobile sectors are set to witness a surge in demand.