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16
November 2016
Private sector Axis Bank on Wednesday
announced a cut in its marginal cost of fund-based lending rate (MCLR) by
0.15%-0.20% effective coming Friday. The
Total Investment & Insurance Solutions
"Axis Bank reviews and reduces the
MCLR by 15 basis points (bps) or 0.15% across all tenures up to 1 year and by
20 bps for 2-year and 3-year tenures. The reduced MCLRs will take effect
starting 18 November, 2016," the lender said in a statement here. The Total Investment & Insurance
Solutions
For loans of overnight tenure, the new
MCLR will be 8.65%. One-month tenure will attract a rate of 8.70% while those
for three and six months will be 8.90% and 9%, respectively.
For one year, the new MCLR will be
9.05%. The bank will levy interest rate of 9.10% and 9.15% for two years and
three years, respectively. The
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Following the Reserve Bank of India
(RBI) cutting its repo rate by 25 bps last month, public sector lenders United
Bank of India, Canara Bank, Indian Bank, Indian Overseas Bank, Bank of India
and Syndicate Bank, as well as private sector ICICI Bank and Kotak Mahindra
Bank, have cut lending rates.
To nudge banks to transfer the benefit
of RBI rate cuts, previous Governor Raghuram Rajan had announced a shift to the
MCLR regime. The Total Investment &
Insurance Solutions
Under the MCLR, banks need to consider
their marginal cost of funds, or the cost incurred on incremental deposits
across different maturities, to decide on interest rates.
However, though Rajan -- during his
tenure -- had cut rates by 150 bps since January 2015, banks had hardly moved
at the same pace to cut their lending rates.
From the state-run banks' point of view,
their accumulation of massive non-performing assets (NPAs), or bad loans, that
is impacting profitability, is keeping them from cutting rates.The Total Investment & Insurance
Solutions.
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