Karur Vysya Bank, a private sector bank, has reduced its marginal cost of funds-based lending rate (MCLR) by 10 basis points (0.10 percentage points) across all tenors. This reduction in MCLR will make loans linked to the benchmark cheaper for consumers. The new rates will be effective from September 7.
The benchmark one-year tenor MCLR, which is used to price most consumer loans such as auto and personal loans, will be reduced to 9.45% from the existing rate of 9.55%. The rates for other tenors, including one-month, three-month, and six-month tenors, will range from 9.30% to 9.45%. The MCLR for overnight tenor will be reduced to 9.15% from 9.25%.
This reduction in MCLR is expected to make borrowing cheaper for consumers. The move is likely to boost loan demand and support economic growth. The reduction in MCLR is also expected to benefit existing borrowers who have taken loans linked to the MCLR benchmark.
The Reserve Bank of India (RBI) had kept its benchmark lending rate unchanged at 5.5% in its last monetary policy meeting. The RBI’s decision to keep interest rates unchanged was seen as a positive move by the banking sector, as it would help to maintain liquidity in the system.
Karur Vysya Bank’s decision to reduce its MCLR is in line with the overall trend in the banking sector, where several banks have reduced their lending rates in recent months. The reduction in MCLR by Karur Vysya Bank is expected to be followed by other banks, which could lead to a reduction in borrowing costs for consumers.
Overall, the reduction in MCLR by Karur Vysya Bank is a positive move that is expected to benefit consumers and support economic growth. With the new rates coming into effect from September 7, consumers can expect to pay lower interest rates on their loans, making borrowing more affordable. The move is also expected to boost loan demand and support the growth of the banking sector.