On Friday, Bank of Maharashtra announced a nominal 5 basis points reduction in its lending rates across various tenors. The announcement comes a day after the Reserve Bank (RBI) reduced the benchmark repo rate by 25 basis points for the second consecutive time.
On Thursday, the central bank cut the repo rate to 6 percent from 6.25 after its first bi-monthly monetary policy committee meet citing the need to support growth that has lost its momentum of late. The GDP forecast for FY20 was also reduced to 7.2 from 7.4 percent.
Bank of Maharashtra reduced its one-year marginal cost of funds-based lending rate (MCLR) to 8.70 percent from 8.75. MCLR is the minimum rate below which a bank won't lend and also the benchmark to which most of the bank's lending rates are linked. The Pune-based bank's six-month, three-month and one-month MCLRs were also revised downwards to 8.50, 8.45 and 8.25 percent, respectively.
However, the lender left its base rate unchanged at 9.50 percent. Bank of Maharashtra is the first lender to announce a nominal 5 bps reduction in the pricing of its six months products after the February rate cut.
Talking to the reporters on Thursday post the policy announcement, RBI governor Shaktikanta Das, said, "after the last meeting I had held with banks some of them have marginally (up to 5-10 bps) cut their MCLR, but they need to do more."