United Bank of India stated that rate for 1-year tenure has been reduced by 0.60 per cent to 8.8 per cent.
New Delhi: Public moneylender United Bank of India reduced its benchmark lending rate by up to 0.90 per cent, joining other banks such as State Bank of India, HDFC Bank, ICICI Bank and Punjab National Bank.
The bank’s asset accountability committee reviewed downwards the marginal cost of funds-based lending rate (MCLR) by 0.60-0.90 per cent across different tenures with effect from January 6.
The rate for 1-year tenure has been slashed by 0.60 per cent to 8.8 per cent, the bank stated in a BSE filing today. With the drop in benchmark rate, home, car and other loans linked to MCLR will also become cheaper.
The 1-month loaning rate has been cut by 0.90 per cent to 0.90 per cent.
Yesterday, the country’s 2nd-biggest private lender HDFC Bank cut its benchmark lending rate by up to 0.90 per cent.
Earlier this week, the country’s largest lender SBI, along with PNB and Union Bank of India, went in for similar cutbacks by up to 0.9 per cent.
Rate of SBI for a 1-year loan has now come down to 8 per cent, from 8.90 per cent. Succeeding demonetization, banks are submerged with deposits that have brought down their cost of funds, which explains the latest spell of lowering of rates.
After RBI’s prodding, banks switched to MCLR as their new benchmark lending rate from June previous year, switching 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 safeguard fair interest rates for borrowers as well as banks. MCLR also seeks to address the regulator’s main objective of expediting financial policy transmission along with augmenting uniformity and transparency in the calculation methodology of lending rates. MCLR rates are revised every month.