As expected the banks have reduced the lending rates after the demonetisaton. A day after PM Modis speech the banks announced reduction in the lending rates.
The country’s largest bank, State Bank of India, on Sunday slashed its loan rates sharply by 0.90 percentage points across all tenure loans in one of the steepest cuts since the global economic crisis in 2008.
After the move, the so-called overnight marginal cost of lending rates fell to 7.75% from 8.65%.The rates for one-year loans are now 8% as against 8.90%, while for 2-year loans it is 8.10% and 3-year maturity it is 8.15%.
Helped by substantial surge in deposits, the interest rate cut is expected to boost sentiments which suffered due to demonetisation.
The new loans rates will be effective from January 1.Women home loan borrowers of SBI will be able to avail loan at interest rates of 8.20% while others can avail home loan at 8.25%.
Similarly, Union Bank of India has reduced its one year MCLR by 65 basis points or 0.65% to 8.65%.
IDBI Bank and State bank of Travancore had also announced cut in lending rates. Borrowers of IDBI bank seeking three-year loans will be charged 9.30%, down 0.40%; while six-month loans have been pegged at 8.90%, down 0.35%.
IDBI bank will charge 9.15% on one-year loans against 9.30% now.Banks have been flush with an estimated Rs 14.9 lakh crore deposits following demonetisation.
That had raised expectations banks would cut lending rates to boost credit growth and spark a revival in private investments.
Lower lending rates will be welcomed by the Reserve Bank of India, which has cut the policy rate by 175 bps or 1.75% since the start of 2015 but has felt banks were being too slow to pass the benefits to customers.
