Banks cut MCLR after RBI keeps repo rates unchanged; here is a look at revised interest structure

On 9 December, the country's largest lender SBI announced the reduction in its marginal cost of MCLR by 10 basis points across all one-year products.

FP Staff December 11, 2019 15:53:33 IST
Banks cut MCLR after RBI keeps repo rates unchanged; here is a look at revised interest structure
  • SBI rates are the cheapest and the PSB has made eighth consecutive lending rate reduction in a row since the beginning of the fiscal.

  • On 9 December, state-run Bank of India also revised its one-year MCLR-based lending rates by up to 20 basis points across various tenors

  • UCO Bank also lowered its MCLR by 10 bps across tenors and the revised one-year MCLR now stands at 8.30%, down from the existing 8.40%

Both public and private sector banks have reduced the marginal cost of lending rate (MCLR) up to 20 basis points in the past one week. On 5 December, the Reserve Bank of India (RBI) had kept the repo rates unchanged at 5.15 percent in its fifth bi-monthly monetary policy statement for 2019-20.

Though the RBI did not cut the repo rate this time, most of the banks started lowering the interest rates on loans.  In 2019, the RBI has cut repo rate by 135 basis points so far to a nine-year low of 5.15 percent. Analysts were expecting another 25 basis points cut on 5 December. Here is a look at the banks which cut the interest rates recently.

SBI cuts MCLR by 10 bps

On 9 December, the country's largest lender State Bank of India (SBI) announced the reduction in its marginal cost of MCLR by 10 basis points across all one-year products.

Banks cut MCLR after RBI keeps repo rates unchanged here is a look at revised interest structure

Representational image. PTI

This is the eighth consecutive cut in MCLR by the lender this fiscal.

"To pass on the benefit of our falling cost of funds to customers, we have reduced MCLR by 10 bps across all tenors," a statement from the bank said.

The new one-year MCLR has been cut to 7.90 percent from 8 percent.

Bank of India slashes MCLR by 20 bps

On 9 December, state-run Bank of India also revised its one-year MCLR-based lending rates by up to 20 basis points across various tenors.

The move comes hours after the larger peer SBI announced 10 bps reduction to 7.90 percent in its one-year MCLR or marginal cost-based lending rates-based loan pricing.

This makes the SBI rates the cheapest and this is the eighth consecutive lending rate reduction by the largest lender since the beginning of the fiscal.

The Kolkata-based lender has reduced its MCLR for overnight rates by 20 bps while for other tenors the cut is 10 basis points, a bank statement said, adding the overnight rates will stand at 7.75 percent.

The new one-year MCLR is fixed at 8.20 percent as against 8.30 percent.

UCO Bank lowers rates

On Tuesday, UCO Bank has lowered its MCLR by 10 basis points across tenors. The revised one-year MCLR now stands at 8.30 percent, down from the existing 8.40 percent, the state-run lender said.

The revised overnight, one-month, three-month and six-month tenor MCLR have been slashed by 10 basis points, it said.

This will lead to all MCLR-linked loans becoming cheaper by way of similar reductions, UCO Bank said.

Bank of Baroda reduces MCLR to 8.25%

On Tuesday, Bank of Baroda reduced the one-year MCLR by 0.05 percentage points to 8.25 percent from Thursday.

The one-year MCLR is used as a benchmark for setting most of the personal loans such as home and auto.

"We advice that the bank has revised Marginal Cost of Funds Based Lending Rate (MCLR) with effect from December 12, 2019," Bank of Baroda said in a regulatory filing.

The lender has also slashed MCLR for other tenors from overnight to six months in the range of 7.65-8.10 percent.

Union Bank of India lending rate at 8.2%

On Tuesday, Union Bank of India announced that it cut MCLR by 5-10 basis points (bps) across all tenors. After the cut, Union Bank of India's one-year MCLR now stands at 8.2 percent, down from 8.25 percent.

HDFC Bank cuts lending rates by 15 bps

Private sector lender HDFC Bank cut its MCLR for all tenors by 15 bps. HDFC Bank cut the 6-month MCLR by 10 bps to 8 percent, 1-year rate by 15 bps to 8.15 percent, says the bank's website.

Now, the 6-month MCLR stands at 8 percent down by 10 bps, 1-year will be 8.15 percent (a cut of 15 bps), 2-year rate will be 8.25 percent (a cut of 15 bps) and the 3-year rate will be 8.35 percent (down 15 bps).

With PTI inputs 

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