Axis Bank is the latest lender to announce a cut in base rate following a higher-than-expected lending rate cut by the Reserve Bank of India (RBI) on Tuesday.

Axis Bank, the country's third largest private sector lender, has reduced its benchmark lending rate by 35bps to 9.5%.

Soon after the central bank's rate cut decision, many banks like State Bank of India (SBI), Bank of India and Andhra Bank have announced a reduction in their base rate.

While the country's largest lender, SBI, slashed its lending rate by 40bps, Andhra Bank reduced its base rate by 25bps.

The RBI surprised the markets by cutting the repo rate by 50bps (basis points) on Tuesday. Markets had expected the central bank to reduce the rate by 25bps.

With the latest cut, the RBI has slashed the repo rate by 125bps to 6.75% so far this year. The central bank, however, kept the cash reserve ratio (CRR) unchanged at 4%.

However, transmission of RBI rate cuts by banks to end users did not keep pace, as lenders remained sceptical about credit uptake even after large base rate cuts.

Prior to RBI's September meeting, the banks had cut the base rate by just 30 bps on an average compared to 75bps cut in the central bank's repo rate, Business Standard reported.

Bank credit growth, a major indicator of economic growth, slowed to a two-decade low in the fiscal year ending March 2015. In 2014-15, credit growth was up 9.52%, down from an increase of 13.83% in 2013-14.