A day after Prime Minister Narendra Modi asked banks to prioritize their lending towards the poor and middle class, the country’s top PSU lenders such as the State Bank, PNB and Union Bank announced a rate cut in their benchmark lending rates by up to 90 basis points. Earlier, the country’s largest lender, SBI reduced marginal cost of funds based lending rate (MCLR) by 0.9 percent from 8.90 percent to eight percent for one-year tenure, the bank said in a statement.
Flushed with funds after demonetisation, the base interest rate for other tenures, including one month, three months and six months, has been slashed by 0.9 percent. MCLR has been reduced by 0.9 percentage points to 8.10 percent for two-year term and 8.15 percent for three-year tenure.
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Also, the Punjab National Bank (PNB) and Union Bank of India (UBI) too have brought down the benchmark interest rate by up to 0.9 percent. PNB has cut its one-year MCLR rate by 0.7 percent to 8.45 percent from 9.15 percent, effective today.
Yesterday, the Prime Minister had asked banks to pay special attention towards the need of poor and middle class.
Banks have moved to MCLR as their new benchmark lending rate from June, replacing the base rate system for new borrowers. It is calculated on the marginal cost of borrowing and return on net worth for banks. It was introduced by RBI to ensure fair interest rates to borrowers as well as banks.