New Delhi: As banks continue to be flushed with deposits thanks to demonetisation move of the Modi government, state-owned Bank of Baroda has cut benchmark lending rates by 0.2 percent.
The bank on Tuesday informed that it has cut the benchmark lending rates and that the new marginal cost of funds based lending rate (MCLR) will be effective November 1.
Following the cut, the new lending rate (MCLR) will now be 9.05 percent for 1-year tenure, down 0.2 percent from 9.25 percent.
For three months, MCLR has been reduced by similar percentage points to 8.95 percent and for six months, the rate will be 9 percent.
Yesterday, another leading public sector lender reduced its MCLR rate by 0.05 percent on select maturities. Banks have moved to MCLR as their new benchmark lending rate from June, replacing the base rate system for new borrowers.
It is calculated on the marginal cost of borrowing and return on net worth for banks. It was introduced by RBI to ensure fair interest rates to borrowers as well as banks.
It also seeks to address the regulator's primary objective of expediting monetary policy transmission along with augmenting uniformity and transparency in the calculation methodology of lending rates. MCLR rates are revised every month.
With PTI Inputs