SBI and Indian Overseas Bank Slash MCLR Rates Across Tenures, Benefiting Borrowers

The State Bank of India (SBI) and Indian Overseas Bank (IOB) on Friday revised their marginal cost of funds-based lending rate (MCLR) by 5 basis points and 10 basis points (bps), respectively, across all tenures as has been notified on their websites.

What Is The Current Range Of MCLR Rates?

At present, the rates of State Bank of India are in the range of 7.90-8.85%. In the previous month, the bank had reduced its MCLR by 25 bps across tenures. While for Indian Overseas Bank, the rates are in the range of 8.05-8.85%. These revised rates are effective from Friday.

What Is MCLR?

MCLR is the minimum lending rate below which the banks are typically not permitted to lend. Banks need to review and publish their MCLR of different maturities every month, according to RBI guidelines.

Other Banks Following With Rate Adjustments

Very recently, the Bank of Baroda and HDFC Bank have also revised their MCLR rates.

HDFC Bank, which is the country's largest private sector bank, has slashed its MCLR rates by 5 bps on certain tenures and fall in the range of 8.55-8.75%. In July, the lender had cut MCLR by 30 bps.

Bank of Baroda reduced the MCLR rates by 10-35 bps. The rate for overnight tenure fell from 8.10-7.95%, one-month rate fell from 8.30-7.95% and 3-month rates fell from 8.50-8.35%. The rates for six-month tenure and one-year tenure fell by 10 bps to 8.65% and 8.80%, respectively.

Canara Bank kept its MCLR rate unchanged for the month of August.

RBI's Policy Impact On Lending Rates

Since February, the Reserve Bank of India (RBI) has reduced the repo rate by 100 bps while the weighted average lending rate on fresh rupee loans has fallen by 78 bps for scheduled commercial banks.

In the same period, the lending rates of public sector bank fell by 86 bps and private banks declined by 50 bps.

As per the data on lending and deposit rates of scheduled commercial banks for the month of July, the 1-year median marginal cost of funds-based lending rate moderated to 8.75% in July from 8.90% in June.

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