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HDFC Bank cuts MCLR by up to 15 bps

Private sector lender, HDFC Bank, cut its marginal-cost based lending rate (MCLR) for all tenors by 15 basis points (bps). According to the bank’s website, it has cut the 6-month MCLR by 10 bps to 8 percent, 1-year rate by 15 bps to 8.15 percent

ET Online|
Dec 09, 2019, 03.38 PM IST
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These new rates are effective from December 7, 2019.
HDFC Bank, the country's largest private sector bank, cut its marginal-cost based lending rate (MCLR) on loans for all tenors by up to 15 basis points (bps). Last month, too, the bank cut its MCLR across tenors by up to 10 bps.

According to the bank’s website, the latest interest rate cut will be effective from December 7, 2019. After the latest cut, 6-month MCLR stands at 8 percent down by 10 bps, 1-year will be 8.15 percent (a cut of 15 bps), 2-year rate will be 8.25 percent (a cut of 15 bps) and the 3-year rate will be 8.35 percent (down 15 bps).

Tenor-wise MCLRs effective from December 7, 2019:
Tenor wise MCLR in MCLR (November 2019 in %) MCLR (December 2019 in %)
Overnight 7.95 7.8
1 month 8 7.85
3 month 8.05 7.9
6 month 8.1 8
1 year 8.3 8.15
2 year 8.4 8.25
3 year 8.5 8.35
HDFC Base Rate 9.2 8.85
Source: Bank website

On Monday morning, the country's largest lender, State Bank of India (SBI), announced a 10 bps cut in its one-year MCLR.

It looks like banks will continue reducing loan rates . This is because RBI governor, Shaktikanta Das during the monetary policy press briefing said that although it is not in a hurry to keep reducing interest rates, it would work to ensure that the transmission turns more effective since much needs to be passed on.

On a cumulative basis, the RBI has cut repo rate by 135 bps during February to October this year. The full impact on lending rates is still playing out -- until now, it is 44 bps with regard to new loans.

RBI said the one-year median MCLR has declined by 49 basis points since February while RBI cut the repo rate by 135 basis points cumulative in the same period. The weighted average lending rate (WALR) on fresh rupee loans sanctioned by banks declined by 44 basis points, while the WALR on outstanding rupee loans increased by 2 basis points during this period.

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