Following the repo rate cut of 25 basis points by RBI last week IDBI Bank has brought cheer to new loan borrowers and has reduced its marginal cost of funds based lending rate (MCLR) by 5-10 basis points across various tenors. The new rates on Personal Loans, Home Loans and Auto Loans are applicable with immediate effect.
The current one-year MCLR for IDBI is now 8.95 percent. The revised rates are as follow:
Just a day before, other prominent banks such as Bank of Maharashtra and Oriental Bank of Commerce (OBC) have also announced a cut in the MCLR.
The OBC has reduced one-year MCLR by 5 basis points. The applicable new lending rates for OBC are: for one year tenor, 8.70 % and for six-month tenor, 8.60 %.
The revised lending rate of the Bank of Maharashtra for one-year tenor is 8.60 %.
In another development, Allahabad Bank has also announced 5 basis points cut in the marginal cost of funds based lending rate across different tenors. The overnight MCLR is now 8.05%, one-month MCLR is 8.15%, three months MCLR is 8.35%, six months MCLR is 8.40% and one-year MCLR is 8.55%. The revised rates are effective from 14 June 2019.
The rate cut by various banks have come in lieu of the third consecutive reduction in the benchmark lending rate by the apex bank in the bi-monthly monetary policy review concluded on June 6, 2019. So far, the combined reduction in the rates stands at 0.75% this year.
Although many banks have still not transferred the rate cut benefit to the consumers yet, more and more lenders are expected to follow suit and pass on the lower rate benefit to the borrowers.
If you have a running loan on a floating interest basis, your EMI is likely to reduce after the reset date. The variation in effective interest cut by different lenders owes to factors such as operating costs and the cost of deposits for each bank.
Earlier this week, the State Bank of India, which is the largest public sector bank in the country