Biznextindia : Public sector lender Bank of Baroda has cut its Marginal Cost of Fund based Lending Rates (MCLR) by .05% or 5 basis points. The revised rates will be effective from 12th of November.
Following this reduction, overnight MCLR has been reduced to 6.60 per cent from 6.65 per cent earlier. Similarly, One Month MCLR has been reduced to 7.05 per cent, Three month MCLR reduced to 7.20 per cent, six month MCLR reduced to 7.30 per cent and one year MCLR reduced to 7.45 per cent.
This is the 8th consecutive rate cut by the bank in the current financial year and the bank has cumulatively reduced MCLR upto 95 basis points.
Last month the bank had reduced Overnight and six month MCLR by 5 basis points. In September, the bank had reduced MCLR of various tenures upto 30 basis points.
The MCLR refers to the minimum interest rate of a bank below which it cannot lend, except in some cases allowed by the RBI. It is an internal benchmark or reference rate for the bank. MCLR actually describes the method by which the minimum interest rate for loans is determined by a bank – on the basis of marginal cost or the additional or incremental cost of arranging one more rupee to the prospective borrower. The MCLR methodology for fixing interest rates for advances was introduced by the Reserve Bank of India with effect from April 1, 2016. This new methodology replaces the base rate system introduced in July 2010.