SBI reduced MCLR by 0.05 percent after 10 months

New Delhi, November 1: The lending rate has been reduced by 0.05 percent across maturities. The government-owned State Bank of India (SBI) has reduced the marginal cost of funds based lending rate (MCLR) almost after the time period of 10 months. MCLR is a reference rate for the banks.

 

State Bank of India said that from 8 percent the MCLR has come down to 7.95 percent for one year and also the new rates would be effective from Thursday. As the lending rates have been reduced to 8.10 percent from 8.15 percent for the period of three years. While on overnight borrowings the MCLR has been reduced to 7.70 percent from 7.75 percent and this will also stimulate the other lenders to cut the lending rates.

The Allahabad Bank also reduced the MCLR rate by 0.15 percent on Tuesday. Earlier the MCLR was 8.45 percent which came down to 8.30 percent and it will be effective from Thursday.

The MCLR is the minimum interest rate of a bank below which it cannot lend, except in some cases allowed by the RBI. MCLR actually describes the method by which the minimum interest rate for loans is determined by a bank - on the basis of the marginal cost of arranging one more rupee to the prospective borrower.