Housing, auto and corporate loans are all set to become cheaper with half a dozen PSU and private banks have steeply reducing benchmark lending rate by up to 1.48 per cent after spurt in deposits following demonetisation.
Taking a cue from State Bank of India, other lenders including largest private sector lender ICICI Bank and state-owned Oriental Bank of Commerce and Andhra Bank announced cut in marginal cost of funds based lending rate (MCLR).
SBI reduced the lending rate by a good 0.9 per cent after Prime Minister Narendra Modi in his new year eve address urged the banks to focus on the needs of poor and lower middle class and middle class.
The reduction in lending rates may prompt increase in credit offtake which has moderated substantially putting burden on balance sheet of banks.
Home loan rate for ICICI Bank will come down between 0.45 and 0.6 per cent depending on quantum and category.
Another private sector Kotak Mahindra Bank too reduced the MCLR rate by up to 0.45 per cent.
The bank has reduced MCLR by 0.20 per cent to 9 per cent from 9.20 per cent for 1-year tenor, Kotak Mahindra Bank said in a statement.
However, MCLR for the three-month period has been reduced by 0.45 percentage points to 8.40 per cent while lending rate for 2 and 3 years has been brought down to 9 per cent from 9.25 per cent.
As far as the youngest Bandhan Bank is concerned, it has cut its MCLR by 1.48 per cent to 10.52 per cent effective tomorrow.
With this, the bank has cut its loan rate for small borrowers by almost 4 percentage points since it started operations in August 2015, Bandhan Bank said in a statement.
Oriental Bank of Commerce has reduced the one-year MCLR rate by 0.8 per cent to 8.60 per cent while Andhra Bank has brought it down by similar percentage point to 8.65 per cent effective tomorrow.
Dena bank has reduced marginal cost of funds based lending rate (MCLR) by 0.75 per cent to 8.55 per cent for 1 year tenor, the bank said in a statement.
Yesterday, the country's largest lender SBI along with PNB and Union Bank of India, slashed lending rates by up to 0.9 per cent.
Following the reduction, lending rate of SBI for a one-year loan has came down to 8 per cent from 8.90 per cent.