The Shikha Sharma-led bank cut its marginal cost of funds based lending rate (MCLR) for one year — which serves as the benchmark for a slew of loans including home loans — by 0.65 per cent to 8.25 per cent, it said in a statement.
The new rates, decided by the bank’s asset liability committee which met Friday, are effective from January 18.
“We have passed the entire benefit accruing from a surge in the current and savings account and a drop in deposit rates to the borrowers,” its head of treasury Shashikant Rathi said. He added that the bank had effected a cut of between 0.75-1 per cent in its deposit offerings right after the November 8 government announcement to scrap ~ 500 and ~1,000 notes, which has led to a surge in the low-cost current and saving account deposits.
When asked about his outlook, Rathi said there is no more room for a cut at present and any further action hinges on events like a cut by RBI in its key rates or a surge in low-cost deposits. The bank had also cut its base rate by over 0.10 per cent earlier this month. MCLR replaced the base rate in April last year for a better transmission of the RBI’s policy actions in borrower costs.
He said 30 per cent of the bank’s loan book is on the MCLR-based system, but the number is very dynamic as more people are switching to the lower-priced MCLR rates at a faster pace.
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