State Bank of India on Thursday declared its marginal cost of funds based lending rate (MCLR) for one year at 9.20 per cent. This rate is 10 basis points lower than its current base rate of 9.30 per cent.
According to the RBI, all rupee loans sanctioned and credit limits renewed by banks with effect from April 1, 2016, will be priced with reference to the MCLR. Actual lending rates will be determined by adding the components of spread to the MCLR.
Besides the one-year tenor, SBI has declared MCLR for six other tenors — overnight (8.95 per cent), one month (9.05 per cent), three months (9.10 per cent), six months (9.15 per cent), two years (9.30 per cent), and three years (9.35 per cent).
The RBI said apart from helping improve the transmission of policy rates into the lending rates of banks, MCLR is expected to improve transparency in the methodology followed by banks for determining interest rates on advances.
Parag Jariwala, VP – Institutional Research, Banking and Financial Services, Religare Capital Markets Ltd, said it is difficult to assess margin impact as the spread for each type of loan will be different. In addition, the maturity pattern does not adequately reflect tenors for which loans are taken initially.
"However, [bank] management highlighted that any borrower who chooses a 1 year re-set, lending rates will come down by about 10 basis points. Home loans, term loans to SME/MSME and mid-corporates will largely fall in this category. Therefore, by and large, lending yield should go down by about 10 basis points," he said..