Joining State Bank, PNB and several others, ICICI Bank on Monday announced a reduction of 0.70% to 8.20 per cent for 1-year tenure. The revised I-MCLR benchmarks effective from January 3, 2017. Interest rate on all rupee loans sanctioned and credit limits renewed w.e.f. April 1, 2016 will be priced with reference to I-MCLR benchmarks. Similar cut has been made effective in other tenures, the bank said. “The revised MCLR benchmarks effective from January 3,” the bank said.
The cut in rates is set to reduce interest rate on home and other loans linked to one-year MCLR by similar percentage point. In a similar decision, SBI also reduced MCLR to 8 per cent from 8.90 per cent yesterday.
The sudden cuts in lending rates are a result of high deposits following demonetisation of old high denomination currency notes of Rs 500/1,000.
The reduction in lending rate may prompt increase in credit offtake which has moderated substantially putting burden on balancesheet of banks.
Besides ICICI Bank, other lenders like Kotak Mahindra Bank, Dena Bank, Bandhan Bank, Andhra Bank and Oriental Bank of Commerce also slashed MCLR.
Yesterday, SBI, PNB and Union Bank of India had reduced MCLR rate.
Banks have switched to MCLR as their new benchmark lending rate from June last year, 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.
With inputs from agencies