The fourth biggest lender, Kothak Mahindra Bank, announced its cut of about 0.45% of marginal cost of funds-based lending rates after the SBI steeply slashed its rate offerings. In a statement given, the bank says it has just cut about 0.20% to 0.45% across the period.
The MCLR of about one year has shown a cut of by 0.20% in the long-term customer loan sector whereas a maximum cut of about 0.45% in the case of one month or three month MCLRs is observed.
The one-year MCLR will come down to about 9% and the one-month or three-month MCLRs will reduce by 8.25% and 8.40%, respectively, after the revision. The overnight MCLR, which is the bank’s most hostile or important MCLR offering, has a 0.40% to 8.20% cut off. The revision rates are valid only after January 1, 2017.
Modi said that keeping the banking priorities in mind kindly take the initiative of keeping the poor and middle class people in focus during the banking activities.
Thus, Narendra Modi urged the banks to lend loans to the poor and lower middle class people on first priority basis. On this basis, the SBI cut off its MCLR by 0.90% for the lower class. The banks such as IDBI Bank and State Bank of Travancore have cut down its MCLRs since December last week.
Thus, the RBI’s introduction of the MCLR, a new benchmark lending rate, is calculated on the marginal cost of return and borrowing on the net worth for the banks.