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Allahabad Bank launches external benchmark linked loans for retail borrowers

With the introduction of these products, the bank is passing on the benefit of lower interest rate in the range of 5-150 bps from the existing rate of interest under MCLR.

ET Online|
Sep 20, 2019, 03.04 PM IST
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Public-sector lender, Allahabad Bank, announced Wednesday that it has launched external benchmark linked loans for retail borrowers and micro and small enterprises. According to a press release issued by the bank, the retail products on offer will be housing, car, education, personal, consumer loans etc., and micro and small enterprise loans will be trading, manufacturing, MUDRA, commercial vehicle, rent discounting, property loans and so on. It added, "Presently, the bank has identified RBI's Repo Rate and 3 Month MIBOR as the Benchmark Rates."

With the introduction of these products, bank is passing on the benefit of lower interest rate to the customers in the range of 5 bps to 150 bps from the existing rate of interest under MCLR, stated the press release.

It is not just loan products, but the bank said that to manage the interest rate risk, some "Liability products viz., Savings Accounts (Rs.40 lacs & above), Long tenure Fixed Deposit, Bulk Deposits and Flexi Fix deposits have also been linked with External Benchmark Rate, i.e., RBI's REPO Rate."

The products will be available from October 1, 2019. These products will be available for new customers, and existing borrowers will be offered an option to switch over to the new products.

Allahabad Bank will extend a concession of 5-10 bps to women borrowers. An additional concession of 5 bps per annum with a maximum cap of 25 bps during the life cycle of the loan will be extended to the borrowers who are regular in their repayment, year on year.

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