After RBI’s Rate Cut, Syndicate Bank Follows Suit; Lowers MCLR Rate By 25 Bps

In a move that would reduce loan EMIs for homebuyers, Syndicate Bank on Friday reduced its MCLR rates by 25 basis points, which would be effective from Monday.

It its Asset-Liability Committee (ALCO) meeting, the bank decided to lower its MCLR rates by 25 basis points across all tenors, cumulatively resulting in reduction in its MCLR in different tenors up to 50 basis points in the current financial year.

MCLR is a benchmark rate through, which banks lend money to home loan borrowers.

Earlier this week, the Reserve Bank of India (RBI) had slashed the repo rate by 35 basis points (bps), fourth cut in a row which brought the repo rate down to 5.40 per cent. However, industry experts, while welcoming the move, had said that its effectiveness would depend on the transmission of benefits of lower rates to end-users.

The bank has also decided to introduce Repo Linked Deposit Rate (RLDR) and Repo Linked Lending Rate (RLLR) in a wide range of its products.

It said the housing loans, vehicle loans and consumer loans will now be offered at a RLLR basis. With the change, the housing loans of the bank will start from repo plus 2.90 per cent, that is 8.30 per cent currently.  Similarly, the saving bank deposits over Rs 25 lakh will henceforth be based on RLDR.

The bank expects that this will ensure fair and transparent transmission of policy rates in its products. 

“The bank will continuously work towards offering greater reduction in various products in the coming days based on external market bench marks,” a Syndicate bank spokesperson said.

Earlier in the day, State Bank of India, the country’s largest lender, had also reduced its interest rate on home loans by 15 basis points across all tenors effective from August 10. Other banks are also expected to follow suit in coming days.