Banks take cue from SBI to cut rates

Kolkata, Jan 2 (IANS) With a bulk infusion of fresh liquidity arising out from demonetisation, banks, both public and private, on Monday slashed their lending rates, leading to home loan rates falling to their lowest level in six years.

ICICI Bank has announced a reduction of 0.70 percent in marginal cost of funds-nased Lending Rate (MCLR) benchmarks across tenures effective from January 3 while Bandhan Bank Ltd has cut its MCLR by 148 basis points to 10.52 percent per annum effective from Tuesday.

Dena Bank also slashed its MCLR by 75 basis points from 9.30 percent to 8.55 percent for one year tenure starting from January 1.

Country's largest bank State Bank of India had cut its lending rates by 90 basis points for maturities ranging from overnight to three-year tenures, after experiencing a surge in deposits.

Under the MCLR, banks need to consider their marginal cost of funds, or the cost incurred on incremental deposits across different maturities, to decide on interest rates.

State-owned IDBI Bank has also cut in its MCLR by 30-60 basis points effective Sunday while Punjab National Bank also slashed its lending rates across maturities ranging from overnight to five years with the new rates effective from Sunday.

Following the Reserve Bank of India (RBI) cutting its repo rate by 25 bps in October, public sector lenders -- the United Bank of India, Canara Bank, Indian Bank, Indian Overseas Bank, Bank of India and the Syndicate Bank -- as well as the private sector ICICI and Kotak Mahindra banks have cut lending rates.