HDFC Bank Ltd. has cut its one-year marginal cost of funds based lending rate (MCLR) to 8.90 percent, matching the rate offered by market leader State Bank of India.
HDFC Bank has reduced its MCLR by 15 basis points across tenors with effect from November 7, a spokesperson of the company told BloombergQuint.
Consequently, the private sector bank's two-year MCLR now stands at 9.00 percent, three-year at 9.05 percent and its overnight rate is 8.70 percent.
Since April, banks have shifted to the marginal cost of funds method of calculating lending rate from the base rate regime. Accordingly, lending rates are being reviewed every month based on banks' cost of funds.
Since January 2015, the Reserve Bank of India has reduced its policy repo rate by 175 basis points to 6.25 percent.
Also Read: Will SBI, ICICI Bank Spark-Off A Home Loan Rate War?
Banks have been criticised for not transmitting enough of the reduction in policy rates to customers. However, with systemic liquidity being maintained at comfortable levels, and with the promise of more rate cuts by the RBI, banks are starting to pass on rate cuts quicker.
So far this month, State Bank of India has reduced its MCLR by 15 basis points to 8.90 percent, while ICICI Bank has cut its benchmark rate by 10 basis points to 8.95 percent. Other banks are expected to follow suit when they conduct their monthly review of lending rates.
Also Read: HDFC Cuts Rates As Competition In Home Loan Market Heats Up
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