State Bank of India (SBI) and Indian Overseas Bank (IOB) on Friday revised their marginal cost of funds-based lending rate (MCLR) by 5 basis points and 10 basis points, respectively, across all tenures as notified on their websites.
With this, the rates of State Bank of India are in the range of 7.90-8.85%. A month ago, the bank had reduced its MCLR by 25 basis points across tenures. While for Indian Overseas Bank, the rates are in the range of 8.05-8.85%. These revised rates are effective from Friday.
MCLR is the minimum lending rate below which the banks are not permitted to lend. Banks have to review and publish their MCLR of different maturities every month, according to RBI guidelines.
Other Banks Follow with Rate Adjustments
Recently, Bank of Baroda and HDFC Bank too revised their MCLR rates.
HDFC Bank, the country’s largest private sector bank, slashed its MLCR rates by 5 basis points on select tenures and fall in the range of 8.55-8.75%. In July, the lender had cut MCLR by 30 basis points.
Bank of Baroda reduced the MCLR rates by 10-35 basis points. The rate for overnight tenure fell from 8.10%-7.95%, one-month rate fell from 8.30%-7.95% and 3-month rates fell from 8.50-8.35%. The rates for six-month tenure and one year tenure fell by 10 bps to 8.65% and 8.80%, respectively.
Canara Bank kept its MCLR rate unchanged for the month of August.
RBI’s Policy Impact on Lending Rates
Since February, the Reserve Bank of India (RBI) has reduced the repo rate by 100 basis points while the weighted average lending rate on fresh rupee loans has fallen by 78 basis points for scheduled commercial banks. During the same period, the lending rates of public sector bank fell by 86 basis points and private banks fell by 50 basis points.
According to the data on lending and deposit rates of scheduled commercial banks for the month of July, the 1-year median marginal cost of funds-based lending rate moderated to 8.75% in July from 8.90% in June.