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11 Banks Cut Lending Rates Following RBI’s Nudge
After the Reserve Bank of India (RBI) announced its decision to reduce its key interest rate (repo rate) on 7 August, 11 banks informed of a cut in their MCLR (marginal cost of funds based lending rates) across various tenures.
Following the monetary policy review, RBI governor Shaktikanta Das commented on the slow transmission of rate cuts by banks in India. Das said that banks have only made a 29 basis point cut as against a 75 basis point cut made by the central bank till June. After four consecutive rate cuts, repo rates have been reduced by 1.10 percent to 5.40 percent.
"We expect higher transmission of policy action and stance by the banks in the weeks and months ahead," Das told reporters. He said that the benefits of the rate reduction when passed on, will help fasten the economy.
1. Bank of Baroda
BoB cut its MCLR by 15 basis points with effect from 7 August. Its one-year MCLR was lowered from 8.60 percent to 8.45 percent.
| Tenure | MCLR in (%) w.e.f. 07.08.2019 |
|---|---|
| Overnight | 8.05 |
| 1 Month | 8.15 |
| 3 Month | 8.25 |
| 6 Month | 8.40 |
| 1 year | 8.45 |
2. State Bank of India
The State Bank of India (SBI) announced 15 basis points cut in its MCLR within 2 hours of RBI's monetary policy review. The new rates are effective from 10 August.
SBI has been prompt in reflecting changes in the repo rate in 2019. In July, it launched a home loan product with repo rate-linked lending rate (RLLR).
| Tenure | Earlier MCLR (%) | From 10 Aug (%) |
|---|---|---|
| Over night | 8.05 | 7.90 |
| One Month | 8.05 | 7.90 |
| Three Month | 8.10 | 7.95 |
| Six Month | 8.25 | 8.10 |
| One Year | 8.40 | 8.25 |
| Two Years | 8.50 | 8.35 |
| Three Years | 8.60 | 8.45 |
3. HDFC Bank
The largest private sector bank in the country made a 10 basis point cut in its MCLR across all tenures, this week. The revised rates became effective on 7 August.
| Tenure | MCLR in (%) w.e.f. 07.08.2019 |
|---|---|
| Overnight | 8.20 |
| 1 month | 8.20 |
| 3 month | 8.30 |
| 6 month | 8.40 |
| 1 year | 8.60 |
| 2 year | 8.70 |
| 3 year | 8.85 |
4. Oriental Bank of Commerce
On Thursday, OBC announced a 10 basis points deduction in its MCLR across tenures. One-year MCLR was lowered to 8.55 percent with effect from 10 August.
| Tenure | Earlier MCLR (%) | From 10 Aug (%) |
|---|---|---|
| Overnight | 8.20 | 8.15 |
| 1 month | 8.25 | 8.20 |
| 3 month | 8.45 | 8.35 |
| 6 month | 8.55 | 8.45 |
| 1 year | 8.65 | 8.55 |
5. IDBI Bank
The state-owned lender reduced its MCLR by 0.05-0.15 percent for select tenures. The revised rates will be effective from 12 August.
| Tenure | MCLR in (%) w.e.f. 12.08.2019 |
|---|---|
| Overnight | 7.85% |
| 1 Month | 8.10% |
| 3 Month | 8.35% |
| 6 Month | 8.50% |
| 1 year | 8.85% |
| 2 year | 8.95% |
| 3 year | 9.10% |
6. Bank of Maharashtra
The public sector bank cut its MCLR by 10 basis points. The new rates became effective from 8 August.
| Tenure | MCLR in (%) w.e.f. 08.08.2019 |
|---|---|
| Overnight | 8.15% |
| 1 Month | 8.25% |
| 3 Month | 8.30% |
| 6 Month | 8.40% |
| 1 year | 8.50% |
7. Syndicate Bank
Syndicate Bank made a significant rate cut of 25 basis points this week, which will be effective from 12 August. In total, the bank has made a reduction of 50 bps for the current financial year.
Further, the bank has decided to introduce Repo Linked Deposit Rate (RLDR) and Repo Linked Lending Rare (RLLR) in a wide range of its products.
"Housing Loans, Vehicle Loans and Consumer Loans will now be offered at a RLLR basis. With the change the Housing Loans of Bank will start from Repo plus 2.90% i.e. 8.30%. Similarly, the Saving Bank deposits over Rs 25 lacs will henceforth be based on RLDR," the bank said in a statement.
8. Allahabad Bank
Allahabad Bank reduced its MCLR by 15 to 20 basis points for different tenures with effect from 14 August.
Allahabad Bank's MD and CEO S.S.Mallikarjuna Rao said the bank is exploring to develop products of both assets and liabilities linked with external benchmark to transmit the benefits of rate cut to its customers shortly.
9. UCO Bank
The state-owned bank announced a 15 basis points cut in its MCLR across all tenures.
"The benchmark one-year MCLR has been reduced by 15 bps to 8.5 per cent as against 8.65 per cent earlier," UCO Bank said in a statement.
The bank also plans to link its rate of interest with RBI's repo rates.
10. Bank of India
The state-run lender cut its one-year MCLR by 25 basis points to 8.35 percent with effect from 10 August.
| Tenure | MCLR in (%) w.e.f. 10.08.2019 |
|---|---|
| Overnight | 8.10% |
| 1 Month | 8.20% |
| 3 Month | 8.25% |
| 6 Month | 8.30% |
| 1 year | 8.35% |
"MCLR for other tenors have also been reduced. We have similar guidance for the coming months as well when we will endeavour to pass on the benefits of rate cuts," it said.
11. Canara Bank
The Bengaluru-headquartered bank cut its MCLR by 10 basis points. It has cumulatively reduced its MCLR by 20 bps during the last six months.
Canara Bank also said that it would be announcing further reduction in lending rates soon. The public sector lender will be rolling out repo rate linked loan products shortly. With this, the customers desirous of floating rate loans will have two options - MCLR-linked loans or repo rate-linked loans.
