A day after country’s largest lender-State Bank of India revised it benchmark lending rate, several other lenders have followed suit. Several banks including Dena Bank, Kotak Mahindra Bank among others have slashed their rates today and many other lenders are expected to follow suit.
This reduction in lending rate follows the pile up in deposits that the banks have witnessed post demonetisation. As per the RBI data, Rs 12.4 lakh crore have been deposited with banks till December 10.
ICICI Bank, country’s largest private sector lender, India Company News has reduced its MCLR by 0.7% across different maturities. The bank has revised its 1 year MCLR from 8.9% to 8.2%, effective from January 3.
Banks had been asked by the regulator to switch to Marginal cost of funds based lending rates (MCLR) since earlier this year to improve faster transmission. However, despite this shift and prior to reduction in MCLR this time around the banks had been slow in passing the rate cut. Since January 2015, RBI has reduced the repo rate (the rate at which it lends to banks) by 175 basis points since January 2015.