SBI cuts lending rate by 0.9% across maturities effective from Jan 1,2017
Posted on: 02 Jan 2017 10:48:44
02 January 2017 Current Affairs: Country’s largest lender State Bank of India (SBI) has cut benchmark interest rate across various maturities by 0.9%, effective from 1st January 2017, a move that is expected to be shortly followed by other banks also.The bank has reduced marginal cost of funds based lending rate (MCLR) by 0.9% from 8.90% to 8% for 1-year tenure.
Banks have moved to MCLR as their new benchmark lending rate from June, replacing the base rate system for new borrowers. It is calculated on the marginal cost of borrowing and return on net worth for banks. It was introduced by RBI to ensure fair interest rates to borrowers as well as banks.
It also seeks to address the regulator’s primary objective of expediting monetary policy transmission along with augmenting uniformity and transparency in the calculation methodology of lending rates. MCLR rates are revised every month.
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