Bank of Baroda on Tuesday reduced the marginal cost of funds-based lending rate (MCLR) by 20 basis points (bps) across tenures. The bank’s one-year MCLR now stands at 9.05%.
MCLRs on overnight borrowings and loans with tenures between one month and five years will now range between 8.8% and 9.25%. Banks review their MCLRs every month.
Private sector lender HDFC Bank on Monday cut its MCLR by 15 bps across tenures. Along with State Bank of India and ICICI Bank, HDFC Bank now has a one-year MCLR of 8.9%.
YES Bank has also cut the MCLR on one-year loans by 15 bps to 9.1%. MCLRs on loans of other tenures at the bank now range between 8.4% and 8.85%, as against a range of 8.5% to 9.2% earlier.
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As deposits with the banking system continue to rise as a result of the demonetisation of high-value currency notes and interest rates on term deposits drop, banks are taking the opportunity to pass on the benefit of the fall in cost of funds to borrowers. Banks have received deposits worth Rs 8.11 lakh crore between November 10 and November 27, according to the Reserve Bank of India.
While the repo rate, the rate at which the RBI lends to banks, has moved from 6.75% at the beginning of April to 6.25%, SBI has reduced its one-year MCLR from 9.2% to 8.9% over the same period.
One-year MCLRs at large private lenders ICICI Bank and HDFC Bank have followed the same trajectory. With the latest cut, Bank of Baroda has transmitted 25 bps of the 50 bps of repo rate cuts effected since April.