State Bank of Tranvancore (SBT), a subsidiary of SBI, on Friday slashed benchmark lending rate by up to 0.3 per cent. The bank has reduced marginal cost of funds based lending rate (MCLR) by 0.25 per cent from 9.45 per cent to 9.20 per cent for one-year tenure, SBT said in a statement.

Similarly, the bank reduced lending rate by similar percentage point for tenure including one month, three months, and six months. However, MCLR has been reduced by 0.3 percentage points to 9.30 per cent. The new marginal cost of funds based lending rate (MCLR) will be effective from January 1, it said, reports PTI.

Banks have moved to MCLR as their new benchmark lending rate from June, replacing the base rate system for new borrowers. It is calculated on the marginal cost of borrowing and return on net worth for banks. It was introduced by the Reserve Bank of India to ensure fair interest rates to borrowers as well as banks.

It also seeks to address the regulator's primary objective of expediting monetary policy transmission along with augmenting uniformity and transparency in the calculation methodology of lending rates. MCLR rates are revised every month.

Meanwhile, SBT has raised Rs 600 crore from Basel III-compliant additional Tier I bonds. The bonds carries a coupon rate of 8.50 per cent per annum on private placement basis with call option on December 30, 2021, said the PTI report.

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