Axis Bank’s one-year MCLR will now be at 9.35%, down from 9.5%
Mumbai: Axis Bank Ltd on Tuesday reduced its marginal cost of funds based lending rate (MCLR) by 15 basis points (bps) across all tenors and its base rate by 5 bps, with effect from 18 April.
One basis point is one-hundredth of a percentage point.
In a statement, the lender said that its one-year MCLR will now be at 9.35%, down from 9.5% the bank had announced as on 1 April.
Two-year MCLR is set at 9.45%, while three-year rate is set at 9.5%, the bank said.
Axis Bank’s reduced base rate will be at 9.45%, for all its existing borrowers.
Even with the latest round of rate reduction, Axis Bank’s one-year MCLR is higher than that of State Bank of India (SBI), which had set it at 9.2% as on 1 April.
Axis Bank is the first lender to reduce its lending rates after the Reserve Bank of India (RBI) announced a 25 bps reduction in repo rates on 5 April and new liquidity measures making it easier for banks to access funds. The measures are expected to have reduced the cost of funds for banks.
RBI introduced MCLR on 17 December, and the guidelines mandated that banks must price incremental loans using MCLR.
Under MCLR, banks will need to consider their marginal cost of funds, or the cost incurred on incremental deposits across different maturities. To this, banks will add their operating costs, the negative carryover of their cash reserve ratio balances with the central bank and a tenure premium. MCLR is only applicable for new customers, while existing customers may choose to shift to it from the current base rate system.
