India's largest lender State Bank of India (SBI) cuts benchmark lending rate across various tenures by 0.9 per cent on Sunday. Flush with higher deposits following demonetisation, SBI slashed its benchmark lending rate by 0.9 per cent across various maturities, effective.
According to new reports, Punjab National Bank has also decided to reduce its Overnight MCLR to 8.20 per cent with effect from Jan 1.
The bank has reduced the marginal cost of funds based lending rate (MCLR) from 8.90 per cent to 8 per cent for1-year tenure, SBI said in a statement.
The MCLR on overnight borrowings has been reduced to7.75 per cent from 8.65 per cent, while the lending rate for three-year tenure has been cut from 9.05 percent to 8.15 percent.
Similarly, the bank reduced the lending rate by the similar percentage point for tenures including one month, three months, six months and two years. "With this, the bank has reduced its benchmark rate by 2 percent from January 2015," it said.
Banks have moved to MCLR as their new benchmark lending rate from June, replacing the base rate system for new borrowers. It is calculated on the marginal cost of borrowing and return on net worth for banks. It was introduced by RBI to ensure fair interest rates to borrowers as well as banks.
Last week SBI's subsidiary State Bank of Travan core also cut rates by up to 0.3 percent, while IDBI Bank cut its lending rate by up to 0.6 percent across various loan tenors.