Axis Bank on Friday said it has cut its Marginal Cost of Lending Rates (MCLR) by 65-70 basis points. The move by the country’s third largest private sector bank follows the similar cuts by other Indian banks earlier this month.
Now, after the cut, Axis Bank’s MCLR will be 8.25% for one-year tenor, as against 8.9% earlier. It had cut its MCLR last month as well, by 10-15 basis points.
Banks across India have cut their benchmark lending rates owing to a surge in liquidity in the system due to sudden deposits following the demonetisation of high-value currency notes.
MCLR serves as a benchmark for setting various lending rates, including home loan interest rates.
Axis Bank’s new MCLR will be effective from January 18.
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“We have passed the entire benefit accruing from a surge in the current and savings account and a drop in deposit rates to the borrowers,” Axis Bank’s head of treasury Shashikant Rathi said.
RBI replaced previously existing base rate with MCLR in April last year, as it felt there was a need for better transmission of RBI’s policy rate actions in bank’s lending rates as well.
State Bank of India – the country’s largest bank, sharply cut it MCLR by 0.9 percentage points earlier this month. Its one-year MCLR is now at 8%.
Other private sector banks including ICICI Bank, HDFC Bank, Kotak Mahindra Bank, and others, followed SBI and cut their rates too.
Axis Bank was the top gainer on NSE Nifty today. Its shares ended at Rs 472.8, up 3.87% from the previous close.