State-owned IDBI Bank announced a cut in its marginal cost of fund-based lending rate (MCLR) by 30-60 basis points (bps) effective January 1, 2017.
The bank said it has effectively reduced MCLR by 30 bps to 60 bps across various tenures since April 2016.
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.
"The reduction in MCLR is expected to positively impact loan growth; both in the retail consumer segment, corporate sector lending, thereby supporting the growth impulses in the economy," the bank said in a statement.
For loans of overnight tenure, the new MCLR will be 8.50 per cent. One-month tenure will attract a rate of 8.75 per cent, while those for three and six months will be 8.85 and 8.90 per cent, respectively.
For one year, the new MCLR will be 9.15 per cent. The bank will levy interest rate of 9.20 per cent and 9.30 per cent for two years and three years, respectively.
The bank also reduced the base rate from 9.65 per cent per annum to 9.50 per cent per annum and the BPLR (benchmark prime lending rate) from 14.15 per cent per annum to 14 per cent per annum.
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