“Axis Bank reviews and reduces the MCLR by 15 basis points (bps) or 0.15 per cent across all tenures up to 1 year and by 20 bps for 2-year and 3-year tenures. The reduced MCLRs will take effect starting 18 November, 2016,” the lender said in a statement here.
For loans of overnight tenure, the new MCLR will be 8.65 per cent. One-month tenure will attract a rate of 8.70 per cent while those for three and six months will be 8.90 and 9 per cent, respectively.
For one year, the new MCLR will be 9.05 per cent. The bank will levy interest rate of 9.10 per cent and 9.15 per cent for two years and three years, respectively.
Following the Reserve Bank of India (RBI) cutting its repo rate by 25 bps last month, public sector lenders United Bank of India, Canara Bank, Indian Bank, Indian Overseas Bank, Bank of India and Syndicate Bank, as well as private sector ICICI Bank and Kotak Mahindra Bank, have cut lending rates.
To nudge banks to transfer the benefit of RBI rate cuts, previous Governor Raghuram Rajan had announced a shift to the MCLR regime.
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.
However, though Rajan — during his tenure — had cut rates by 150 bps since January 2015, banks had hardly moved at the same pace to cut their lending rates.
From the state-run banks’ point of view, their accumulation of massive non-performing assets (NPAs), or bad loans, that is impacting profitability, is keeping them from cutting rates.