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MCLR rate

Dec 16, 2019, 04.42 PM IST

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MCLR RATE

Allahabad Bank cuts MCLR by 5 bps

The benchmark one-year Marginal Cost of Fund based Lending Rate (MCLR) has come down to 8.30 per cent from 8.35 per cent earlier, the bank said in a regulatory filing.

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  • The rate reduction comes even as the RBI left key policy rates unchanged at the last meeting on December 5. The city-based lender has reduced its one-year MCLR rates, which all retail loans are linked to, only marginally by 5 bps to 8.25 percent.

    Private sector lender, HDFC Bank, cut its marginal-cost based lending rate (MCLR) for all tenors by 15 basis points (bps). According to the bank’s website, it has cut the 6-month MCLR by 10 bps to 8 percent, 1-year rate by 15 bps to 8.15 percent

    According the bank’s press release, this is its eighth consecutive MCLR cut this financial year.

    This makes the SBI rates the cheapest and this is the eighth consecutive lending rate reduction by the largest lender since the beginning of the fiscal.

    After the cut, Union Bank of India's one year MCLR now stands at 8.2 percent, down from 8.25 percent. According to a press release issued by the bank, the new rates will be effective from 11 December, 2019.

    The revised one-year MCLR now stands at 8.30 per cent, down from the existing 8.40 per cent, the state-run lender said in a release.

    The issue of lack of monetary transmission hasn't cropped up suddenly and is something that has been a matter of concern for the RBI in ensuring the pass-through of its policy decisions. The matter snowballed in the last few months after the RBI observed that the effects of its rate cuts are not being felt in terms of interest rates coming down.

    The RBI has urged the government to move forward on reducing interest rates on small savings schemes such as public provident fund (PPF) and post office deposits, to help banks pare rates on deposits and loans and lead to a better transmission of the central bank’s rate cuts.

    The central bank is expecting higher monetary transmission since the share of base rate loans, which have remained largely sticky, has come down. The marginal cost-based floating rate loans, which have annual resets, have become due.

    Private sector lender, HDFC Bank has cut MCLR rates by between 5 bps and 10 bps for these tenors: 6-month, 1-year, 2-year and 3-year. These rates will be effective from today, i.e., November 7. In August, the bank had cut MCLR across all tenors.

    The Reserve Bank of India, in its monetary policy review today, kept the repo rate unchanged at 5.15%

    Here are the interest rate on home loans charged by the banks under the external benchmark regime. The interest rate is liked to the RBI repo rate. The table given below is applicable to salaried individuals and self-employed persons.

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