Indian Bank announces a cut in its lending rates

The country’s largest lender SBI was the first bank, after RBI move, to announce a rate cut followed by Bank of India the next day, according to Business Standard. Moreover, Bank of Baroda and Union Bank of India also announced rate cuts on April 1, 2020.

The bank has revised the different lending rates with effect from April 1, 2020. Thus, Indian Bank has cut the benchmark one-year tenor marginal cost of funds-based lending rate (MCLR) by 0.15% to 8.10%, which is the rate against which most of the personal and consumer loans are set.

For other tenors in MCLR, from overnight to 6 months lending, the rates have been slashed in the range of 0.05 to 0.10%. The bank has also cut the base rate to 9.15% from 9.45% earlier. It is the minimum threshold below which a bank cannot lend. Besides, the benchmark prime lending rate (BPLR) has now been brought down to 13.40% from 14.20%.

Indian Bank said that the floating rate loans to medium enterprises will be linked to external benchmark rate (policy repo rate) with effect from April 1, 2020.

Indian Bank said this is applicable for all its subsidiaries/partners. As the bank’s merger kicks-in from April 1, Indian Bank will amalgamate Allahabad Bank into itself.

In 2019, RBI had asked the banks to migrate to the external benchmarking for setting interest rates on loans for effective transmission of repo rates. On March 27, 2020, amid the coronavirus pandemic, RBI had brought down the key repo rate, at which it gives short term loans to banks, to a record 4.40%, down by 0.75%.