ICICI Bank has cut the marginal cost based lending rate (MCLR) on loans for all tenors. The private sector lender has lowered rates by 0.05 per cent to make loans cheaper and the decision will be effective from June 1, 2020. The one year MCLR, to which a majority of loans such as residential mortgages and auto loans are tied now stands at 7.70 per cent, according to data available on the bank's website. The new rate for a loan of 6 month tenure is 7.65 per cent. Similarly, three and one month loans will have interest rates of 7.50 per cent and 7.45 per cent, respectively.
On May 11, ICICI Bank had reduced its fixed deposit rates by up to 50 basis points. State Bank of India (SBI) last week cut interest rates on fixed deposits (FDs) by up to 40 basis points (bps) across all tenors. The country's largest public sector lender also cut rates on bulk deposits of Rs 2 crore or more by up to 50 bps.
"Banks are cutting interest rates after the RBI rcently lowered repo rate amid the ongoing coronavirus crisis. The move to bring down MCLR rates is expected to bring some relief for the loan borrowers during this crisis," SEBI registered tax and investment expert Jitendra Solanki said.
On May 22, Reserve Bank of India (RBI) lowered its repo rate by 40 bps to 4 per cent. The reverse repo rate was also reduced by 40 bps to 3.35 per cent. "The RBI policy announcement in response to the fallout of COVID pandemic is timely. The reduction in policy rate by 40 bps under the assumption that growth in FY21 will be negative is an appropriate move to support economic activity. Uncertainty associated with pandemic, normalisation of economic activity and relaxation made in social distance makes it imperative that policy response is calibrated and swift," Rajnish Kumar, Chairman, SBI, had then said.
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