State-owned lender Dena Bank on Friday reduced the marginal cost of funds-based lending rate (MCLR) on one-year loans by 10 basis points (bps) to 9.3%.
The bank also reduced MCLRs on loans with tenures ranging between one month and six months by 10 bps each. The MCLRs on these loans now range between 9.15% and 9.25%. The bank lowered its overnight MCLR by 5 bps to 9.1%.
As deposits with the banking system continue to rise as a result of 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.
The move by Dena Bank follows cuts by larger lenders. ICICI Bank, the country’s largest private sector lender, on Thursday reduced the MCLR by 5 bps across tenures. The one-year MCLR at the bank now stands at 8.9% at par
with State Bank of India. SBI left MCLRs unchanged a month ago.
On Wednesday, state-owned Punjab National Bank had cut its MCLR by 10 bps across tenures. Effective December 1, the one-year MCLR at the bank stands at 9.15%.