State-run Union Bank of India today reduced benchmark lending rates marginally by 0.1% to 10.65%, a development which could signal a reversal of the high interest rate regime.

"Our asset liability committee, in its quarterly review of interest rates, has decided to bring down the base rate by 10 basis points from 10.75% to 10.65% with immediate effect," a statement from the city-headquartered lender said.

With 13 rates hikes effected by the Reserve Bank in the past 20 months, banks were compelled to pass on the rising cost of funds to their customers.

The rate cut by Union Bank of India is the first such action by a bank in the present cycle.

The move comes a fortnight after the RBI halted its monetary tightening strategy and signalled an easing of policy rates going ahead in its mid-quarter policy review on December 16, alarmed by the dent to growth prospects.