State Bank of India, the largest lender in the country, is the second bank to announce a 0.15 per cent decline in lending rates following a new calculation system. This means that there could be a further decline in borrowing costs before buying season.
private sector bank ICICI Bank was the first to announce a plate of 0.10 percent in its marginal costs of funds lending rate (MCLR) based, Press Trust of India. According to the new figures, the lending rate for home loans SBI 8.90 per cent and the new rates will be effective from 1 November.
The announcement comes after authorities have expressed dissatisfaction that the benefits of rate cuts are passed on to borrowers. The cut is ahead of a busy season during the second half of the year when there is an increase in demand for loans. The MCLR was introduced in April this year by the Reserve Bank of India (RBI) after banks refused to pass over the benefits of rate cuts to borrowers.
The revised fee structure means that:
MCLR 1 year 8.95%
MCLR 1 month 8.75%
MCLR 3 months 8.85%
MCLR 6 months 8.90%
Banks were told to follow a set formula to derive the MCLR on the basis of costs and funds are needed to examine the costs on a monthly basis.
"I agree that transmission through bank lending was less than each of us would have liked. We hope that the next quarter or two, keeping in mind that the government has also reduced the weak savings rate is the MCLR will now take over transmission ", told Patel Urjit media.
Since the beginning of the year, the RBI has reduced the catch rate repo by 175 basis points, including the recent cut.
There are two weeks, the State Bank of India (SBI) and its subsidiary banks, blocked 6.52 lakh debit cards to its customers after a security breach of suspect malware in the ATM network. Later, the bank said it would replace all debit cards.