Banks in lending rate cut rush
A clutch of banks, public and private, announced cuts in their marginal cost of funds-based lending rate (MCLR) on Wednesday, which will lower EMIs on eligible home loan accounts linked to MCLR.
HDFC Bank has cut its MCLR by 5 basis points (bps) across tenors. The rate cut is effective from Monday (June 8), according to its website.
HDFC Bank’s overnight MCLR now stands reduced to 7.30 per cent, while one-month MCLR is 7.35 per cent. The one-year MCLR, to which many of the consumer loans are tied, will now be 7.65 per cent, while the three-year MCLR has been set at 7.85 per cent.
State-run lenders Bank of Baroda (BoB) and Union Bank of India (UBI) also reduced their MCLR across all tenors.
While the BoB’s MCLR cut of 15 basis points (bps) is effective from June 12, the 10 bps revision in UBI’s rates would come into force on June 11.
Bank of Baroda has revised its one-year MCLR to 7.65 per cent from 7.80 per cent, a release said. Its six-month MCLR has been revised downwards to 7.50 per cent from 7.65 per cent earlier.
In a separate release, UBI said its one-year MCLR has been reduced to 7.60 per cent from 7.70 per cent.
The MCLR for six months stands at 7.45 per cent, of three months at 7.30 per cent and of one-month at 7.15 per cent.
Private sector lender Bank of Maharashtra (BoM) has also slashed its MCLR by 20 basis points from June 8.
The rate cuts come amid similar steps taken by the peers after two rate cuts by the Reserve Bank of India (RBI) in order to help the economic growth rise in the aftermath of the Covid-19 pandemic. The RBI has cut its key rates by 115 basis points since March.
State Bank of India (SBI), has reduced its MCLR by 25 basis points across all tenors from Wednesday. The one year MCLR has been revised to 7 per cent from 7.25 per cent.
Last week, the second-largest state-run lender, Punjab National Bank (PNB), had cut its MCLR by 15 basis points across all tenors.
Banks review their MCLR every month.
Most of the banks have also reduced their lending rates linked directly to external benchmarks, such as the repo rate, for a better transmission of policy actions.