On Wednesday, LIC-owned IDBI Bank reduced marginal cost of funds based lending rate (MCLR) by 5 to 10 basis points across various tenors, with immediate effect. MCLR is the minimum interest rate below which a bank does not lend.

On the one-year MCLR, the lender reduced the lending rate to 8.95 percent. The one-year MCLR is the basis for most retail loans like home and car loans.

Bank of Maharashtra and Oriental Bank of Commerce (OBC) also reduced their MCLR after the Reserve Bank of India (RBI) cut its repo rate in the recent bi-monthly monetary policy review.

On 6 June, the RBI announced its third consecutive cut in repo rate by 25 basis points to 5.75 percent. Repo rate is the rate at which the central bank lends to commercial banks.