State Bank of India (SBI) cuts Lending Rates by 5 Basis Points

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India's largest bank, State Bank of India (SBI) today cut Marginal Cost-based Lending Rates (MCLR) across maturities by 5 basis points, effective from tomorrow (1st November 2017). This is the top lender's first lending rate cut in 10 months.

The State Bank, which accounts for more than a fifth of India's banking assets, will lower the 1-year MCLR to 7.95 per cent from 8 per cent. Most banks sharply reduced marginal cost of lending rates (MCLR) in January 2017, post demonetisation exercise after they saw huge inflow of deposits.

The reduction in the lending rates comes within weeks of Rajnish Kumar, taking charge as the new Chairman of SBI for a term of three years. The bank will now pegged MCLR to 7.70% for overnight borrowing and 8.10% for three years. Other largest banks like ICICI Bank and HDFC Bank too may announce a token cut in the lending rates.

About MCLR :

The RBI last year unveiled the MCLR or Marginal Cost-based Lending Rates, which sought to remove much of the discretion commercial banks have to set lending rates. MCLR refers to the minimum interest rate of a bank below which it cannot lend, except in some cases allowed by the RBI. It is an internal benchmark or reference rate for the bank.

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