Syndicate Bank, Bank of India cut lending rates post repo rate cut
The six-month lending rate now stands lower by 10 bps to 9.40 per cent for Syndicate Bank while the same rate (six month) for Bank of India stands at 9.25 per cent.
- Oct 5, 2016,
- Updated Oct 5, 2016 8:47 PM IST
A day after RBI cut repo rate by 25 basis points, public sector lenders Bank of India and Syndicate Bank on Wednesday cut their marginal cost of funds based lending rates (MCLR) in the range of 5 bps to 10 bps.
Borrowing from Syndicate Bank has become cheaper by 10 bps for one year MCLR to 9.45 per cent. The new rate for Bank of India stands at 9.35 per cent.
The six-month lending rate now stands lower by 10 bps to 9.40 per cent for Syndicate Bank while the same rate (six month) for Bank of India stands at 9.25 per cent.
While the three month lending rate has been revised to 9.35 per cent for Syndicate Bank, the same for Bank of India stands at 9.20 per cent.
The new rates will come into effect from October 7, Friday.
The system of calculating base rate as per the marginal cost of funds came into effect from April 1, 2016. RBI had asked banks to price fixed-rate loans of up to three years based on their marginal cost of funds from April 1. All banks are following the MCLR system, a new uniform methodology which ensures fair interest rates to borrowers as well as to banks.
The MCLR prevailing on the day the loan is sanctioned is applicable till the next reset date, irrespective of the changes in the benchmark during the interim period.
Existing loans and credit limits linked to the Base Rate may continue till repayment or renewal. The existing borrowers also have the option to move to the MCLR-linked loan at mutually acceptable terms.
Since 2015, the RBI has cut repo rate by 1.5 per cent but the banks have passed the benefit of mere 0.5 per cent to their customers. Though the banks are not bound to pass on the change in rates to the customers, there has been immense pressure on them to do so by the government.
A day after RBI cut repo rate by 25 basis points, public sector lenders Bank of India and Syndicate Bank on Wednesday cut their marginal cost of funds based lending rates (MCLR) in the range of 5 bps to 10 bps.
Borrowing from Syndicate Bank has become cheaper by 10 bps for one year MCLR to 9.45 per cent. The new rate for Bank of India stands at 9.35 per cent.
The six-month lending rate now stands lower by 10 bps to 9.40 per cent for Syndicate Bank while the same rate (six month) for Bank of India stands at 9.25 per cent.
While the three month lending rate has been revised to 9.35 per cent for Syndicate Bank, the same for Bank of India stands at 9.20 per cent.
The new rates will come into effect from October 7, Friday.
The system of calculating base rate as per the marginal cost of funds came into effect from April 1, 2016. RBI had asked banks to price fixed-rate loans of up to three years based on their marginal cost of funds from April 1. All banks are following the MCLR system, a new uniform methodology which ensures fair interest rates to borrowers as well as to banks.
The MCLR prevailing on the day the loan is sanctioned is applicable till the next reset date, irrespective of the changes in the benchmark during the interim period.
Existing loans and credit limits linked to the Base Rate may continue till repayment or renewal. The existing borrowers also have the option to move to the MCLR-linked loan at mutually acceptable terms.
Since 2015, the RBI has cut repo rate by 1.5 per cent but the banks have passed the benefit of mere 0.5 per cent to their customers. Though the banks are not bound to pass on the change in rates to the customers, there has been immense pressure on them to do so by the government.