Mumbai, Aug. 30: ICICI Bank today revised its prime lending rate (PLR), reducing its short-term PLR by more than 100 basis points.
ICICI Bank’s latest move is expected to fuel a bout of fresh cuts by other banks. The banking system is awash with funds and today’s announcement by ICICI Bank is an indication that it has set its sights on chasing borrowers by offering attractive rates.
The revision in PLR will take effect from September 1. ICICI Bank has reduced the short-term prime rate for advances up to one year maturity by 1 per cent to 11.5 per cent while the medium term prime rate for advances of one to three years’ maturity has been reduced by 50 basis points to 12 per cent.
ICICI Bank’s long-term prime rate for advances beyond three years maturity has been fixed at 12.5 per cent. For cash credit facility, the bank has reduced its prime rate by 0.50 per cent to 13 per cent.
ICICI Bank’s cut in PLR comes at a time when yields on government securities are once again heading towards all-time lows.
Market circles say that corporate bond yields were traded at historic lows on Thursday, with the aluminium major Hindalco’s five year bond trading at a low of 7.47 per cent.
Banks will be forced to take a new look at the interest rates as the recent tendency of corporates to tap the bond markets rather than borrow from banks.