[ecis2016.org] Housing, auto and corporate loans are all set to become cheaper, with half a dozen PSU and private banks, announcing steep reductions in their benchmark lending rates by up to 1.48%, after a spurt in deposits following demonetisation
Taking a cue from State Bank of India, other lenders including India’s largest private sector lender ICICI Bank and state-owned Oriental Bank of Commerce and Andhra Bank, have announced cuts in their marginal cost of funds-based lending rates (MCLR).
You are reading: Banks cut base rates; home loans to be cheaper
SBI, on January 1, 2017, reduced its lending rate by a good 0.9% after prime minister Narendra Modi in his new year eve address, urged the banks to focus on the needs of poor and lower middle-class and middle-class.
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Following the reduction, lending rate of SBI for a one-year loan, has come down to 8% from 8.90%.
SBI’s move, was quickly followed by PNB and Union Bank of India, who also slashed lending rates by up to 0.9%.
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The reduction in lending rates, may prompt increase in credit offtake, which has moderated substantially putting burden on the balance sheet of banks.
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Home loan rates for ICICI Bank will come down between 0.45% and 0.6%, depending on quantum and category. Another private sector lender, Kotak Mahindra Bank, too reduced the MCLR rate by up to 0.45%. The bank has reduced MCLR by 0.20% to 9% from 9.20% for one-year tenor, Kotak Mahindra Bank said in a statement. However, the MCLR for the three-month period has been reduced by 0.45 percentage points to 8.40%, while the lending rate for two and three years, has been brought down to 9% from 9.25%.
As far as the youngest player, Bandhan Bank is concerned, it has cut its MCLR by 1.48%, to 10.52%, effective from January 3, 2017. With this, the bank has cut its loan rate for small borrowers by almost 4 percentage points, since it started operations in August 2015, Bandhan Bank said in a statement.
Oriental Bank of Commerce has reduced the one-year MCLR rate by 0.8% to 8.60%, while Andhra Bank has brought it down by a similar percentage point to 8.65%, effective January 3, 2017. Dena bank has reduced the MCLR by 0.75%, to 8.55%, for 1 year tenor, the bank said in a statement.
Source: https://ecis2016.org/.
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