After RBI's repo cut, IDBI slashes rate

Mumbai: Post the Reserve Bank of India (RBI) cutting the benchmark repo rate last week, so far only a few banks have announced lowering their lending rates. On Wednesday, private lender IDBI Bank cut its marginal cost of funds based lending rate (MCLR) by 5-10 basis points across various tenors, with immediate effect. Besides, state owned Oriental Bank of Commerce (OBC) and Bank of Maharashtra have lowered their lending rates by 5 to 10 basis points. However top lenders have refrained so far from cutting lending rates. The RBI in its second bi-monthly monetary policy on June 6 cut the repo rate by 25 basis points making it the third rate cut since February. The RBI has lowered its benchmark repo rate by a 75 basis points this calendar year to spur economic growth while banks in response have cut their lending rates by mere 21 basis points for new borrowers but raised them by 4 basis points for old borrowers. One basis point is one hundredth of a percentage point.

IDBI Bank said that it has reduced its one-year MCLR or the minimum lending rate by 5 basis points to 8.95 per cent. The one-year MCLR is the benchmark against which most consumer loans such as home loans, auto and personal loans are priced.