Race on among banks to woo consumers
Race on among banks to woo consumers
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NEW DELHI: Following the ban on high-value bank notes and State Bank of India (SBI) move to slash the marginal cost of funding-based lending rates (MCLR), it sparked a race among the country’s lenders to woo consumers with cheaper home and vehicle loans.

On Monday, a day after SBI slashed MCLR by a steep 0.90%, two more private sector banks slashed a key lending rate as a surge in deposits.

While ICICI Bank, the country’s largest private lender, slashed its MCLR by 0.70%, Kotak Mahindra Bank announced a 0.45% cut. Another public sector lender, Dena Bank, also announced a 0.75% cut in its MCLR for one-year loans.

Banks base their final interest rate to customers on the MCLR and the rate cuts, one of the steepest since the 2008 global financial crisis, will lower interests on loans for new homes and vehicles.

SBI also unveiled on Monday new products and offered customers the option of migrating from the standard base rate to MCLR, adopted by banks last June and revised every month.

Other state-run lenders such as Punjab National Bank (PNB), Union Bank of India (UBI), IDBI Bank and State Bank of Travancore (SBT) have also announced cuts in lending rates.

An estimated Rs 14.9 lakh crore was injected into banks through deposits since Prime Minister Narendra Modi’s surprise announcement scrapping the old Rs 500 and Rs 1,000 currency notes on November 8.

In a New Year Eve speech, Modi had asked banks to “keep the poor, the lower middle class, and the middle class at the focus of their activities” and to act with “public interest” in mind.

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