Within hours of RBI’s surprise cut in the key policy rate, private sector lender ICICI Bank this evening took the lead with a 0.05 per cent reduction in its marginal cost of funds-based lending rate to 9.05 per cent.
Under the new rates, retrospectively effective from October 1, the one-month MCLR will be 8.85 per cent as against 8.90 per cent earlier, the bank said in statement.
The one-year MCLR, which is used to compute the effective yearly rate in a slew of products including the home loans, will be 9.05 per cent as against 9.10 per cent.
After cutting the repo rate at RBI’s fourth bi-monthly monetary policy review of 2016-17, newly appointed Governor Urjit Patel was quick to point out the central bank’s dismay at lenders for holding on to higher rates.
“I agree that the transmission through bank lending has been less than anyone of us would have liked to,” Patel told reporters.
“We are hoping that over the next quarter or two, keeping in mind the government has also reduced the small savings rates, the MCLR itself will now throw up more transmission.”
Since January 2015, the Reserve Bank has reduced repo rate by 175 basis points, including today’s cut, but banks have reduced their base rates only by 60 basis points.
The RBI introduced new marginal cost of funds-based lending rate from April this year.