Shortly after the Reserve Bank of India (RBI) slashed interest rates by an unexpected 35 basis points to boost the economy, several lenders have cut their benchmark lending rates.

Despite the reduction of key rates by the central bank, there have long been concerns over the speedy transmission of these cuts to the economy by banks.

But this time banks have said been quick with passing RBI’s rate cuts to customers.

That means home and car loans are expected to become cheaper.State Bank of India (SBI), India's largest lender by assets, led the cutting spree, reducing its benchmark lending rates by 15 basis points across all tenors on Wednesday.

SBI's one-year marginal cost of fund-based lending rate, or the MCLR, will drop to 8.25 percent per annum from 8.4 with effect from August 10, SBI said in a statement."

SBI has effected full transmission of repo rate cuts by RBI and has passed on the benefit of repo rate reduction by 85 bps during the current financial year to its CC/OD (cash credit and overdraft) customers with limits above Rs 100,000," the bank said in a statement.

SBI said after its fourth cut in MCLR for the year, home loans had become cheaper by 35 bps since April 10.One basis point is a hundredth of a percentage point.RBI cut interest rates for a fourth straight meeting in 2019, taking advantage of mild inflation to expand its effort to boost an economy growing at its slowest pace in nearly five years.

RBI has cut repo rates by 110 bps since February.Here is a list of other banks that have reduced their benchmark lending rates:

Bank of India has cut rates by 25 bps. The move applies to MCLR of the bank under the one-year tenor, where accounts for more than 80 percent of the loan book.

Syndicate Bank has reduced rates by 25 bps.

IDBI Bank has slashed key rates between 5 and 15 bps.

Allahabad Bank has gone for 15-20 bps rate cut.

Bank of Maharashtra has lowered rates by 10 bps.

Indian Overseas Bank cuts rates by 10-15 bps.

Bank of Baroda, India's second largest public sector bank, has dropped MCLR by 15 bps. BoB said it has also introduced a new variant of home loan product linked to RBI’s repo rate.

Published On : 12-08-2019

Source : CNBC TV 18