In its earlier fourth bi-month monetary policy review, the Reserve Bank of India (RBI) asked banks for better transmission of earlier rate cuts made by the Central Bank. It did not change its key interest rate of six percent.
Now, the State Bank of India (SBI), India’s largest bank, has slashed its key lending rate by five basis points. It is the first time the bank has done this in 10 months. The cut is of 0.05 percent across maturities. The rate cut is now active. SBI announced this on its official website.
SBI last made a reduction in the marginal cost of funds based lending rate (MCLR) on Jan. 01. Now, the MCLR is down to 7.95 percent from an earlier eight percent. The rate for 3-year tenures has been lowered to 8.10 percent from 8.15 percent.
MCLR on overnight borrowings has also been slashed from 7.75 percent to 7.70 percent. Another public sector lender, the Kolkata-based Allahabad Bank, slashed its MCLR rate by 0.15 percent across all maturities on Tuesday. Thus, the one year MCLR rate has come down to 8.30 percent from 8.45 percent, effective Nov. 01.