Public sector banks cut MCLR by 25 bps

Public sector banks such as Syndicate Bank, Allahabad Bank, and Andhra Bank, on Friday, announced a cut of up to 25 basis points in their marginal cost of funds-based lending rate (MCLR) across all tenors, on the back of the Reserve Bank of India (RBI) cutting its policy repo rate by 35 basis points.

Further reduction

Banks such as Syndicate Bank and Union Bank of India, which cut its MCLR by 20 basis points (bps) from August 1, also see scope for further reduction in lending rates.

All rupee loans sanctioned and credit limits renewed by banks with effect from April 1, 2016, are priced with reference to the MCLR, which is the internal benchmark for such purposes.

Bengaluru-headquartered Syndicate Bank, in a statement, said it will lower the MCLR by 25 basis points (bps) across all tenors from August 12.

With this cut, the bank’s one-year MCLR will be 8.35 per cent, against the current 8.60 per cent.

Simultaneously, the bank has decided to introduce repo-linked deposit rate (RLDR) and repo-linked lending rate (RLLR) in a wide range of its products.

“Housing loans, vehicle loans and consumer loans will now be offered at an RLLR basis. With the change, the housing loans of the bank will start from repo plus 2.90 per cent – 8.30 per cent.

“Similarly, the saving bank deposits over ₹25 lakh will, henceforth, be based on RLDR,” said the Syndicate Bank statement.

Kolkata-headquartered Allahabad Bank said it will cut MCLR by 15 to 20 bps with effect from August 14. With this cut, the one-year MCLR will be 8.40 per cent, against 8.55 per cent now.

Hyderabad-headquartered Andhra Bank said it will reduce MCLR effective from August 16 by 25 bps across all tenors. With this cut, the one-year MCLR will be 8.45 per cent.

The bank said it will soon introduce repo rate-linked deposit and loan products.

Union Bank of India, in a statement, said that since February 2019 it had reduced MCLR in various tranches by up to 30 bps. However, looking to the current liquidity and interest rate scenario, the bank expects MCLR to further soften by up to 15 bps.

Bank of Maharashtra and IDBI Bank have cut MCLR across select tenors by 10 basis points (bps) and 5-15 bps, respectively.

Following the reduction, the new MCLR of the Pune-headquartered public sector bank for three months is 8.30 per cent (8.40 per cent earlier); 8.40 per cent (8.50 per cent) for six months; and 8.50 per cent for one year (8.60 per cent). The new rates are effective from August 8.

IDBI Bank has pared its three months MCLR by 5 bps from 8.40 per cent to 8.35 per cent. It has cut the MCLR on three maturity buckets by 10 bps each – six-month to 8.50 per cent; one-year to 8.85 per cent; and three-year to 9.10 per cent.

The two-year MCLR has been cut by 15 bps to 8.95 per cent. The new MCLR at IDBI Bank will be effective from August 12.

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