Following many of its peers in cutting lending rates, private sector lender HDFC Bank on Wednesday cut its marginal cost of funds-based lending rate (MCLR) by 75-90 basis points across tenures, effective January 7, it said in a statement.
The bank’s one-year MCLR now stands at 8.15%, 75 bps lower than the previous rate, while overnight, one-month, three-month and six-month MCLR were cut to 7.85%, 7.90%, 7.90%, 8.00% respectively.
The bank was not the only lender to cut interest rates on Wednesday. State-owned lender Canara Bank cut its MCLR by 70-75 bps across tenures, with the one-year MCLR being brought down to 8.45%, from 9.15% earlier. The revised rates will take effect from January 7 onward.
Apart from the two banks, private sector housing finance company Dewan Housing Finance too cut its home loan rates by as much as 50 bps to 8.60%, effective January 4. “We will continue to be prompt and responsive to any initiative in the external environment, as we also continue to undertake several internal measures to benefit our customers as part of our commitment to enable access to home ownership for the LMI segment,” the company’s CEO Harshil Mehta said in a statement.
So far in January, State Bank of India (SBI), ICICI Bank, Punjab National Bank, Union Bank of India, IDBI Bank, Central Bank of India, Kotak Mahindra Bank, Andhra Bank, State Bank of Travancore, YES Bank and Bank of India have cut their MCLRs. The cuts came in reaction to a demonetisation-induced deluge of deposits with banks and a resultant drop in their marginal cost of funds. As per the MCLR regime, banks review their benchmark lending rates every month on the basis of their incremental cost of funds.