Both the banks revealed that the new marginal cost of funds based lending rate (MCLR), a new methodology introduced by the Reserve Bank of India for setting lending rate by commercial banks, will come into effect from November 1.
Making the announcement, Dena Bank said in a statement that it has reduced MCLR by 5 basis points from 9.45 per cent to 9.40 per cent for one year.
The bank added that for three months, MCLR has been fixed at 9.3 per cent, and for six months, the rate has been fixed at 9.35 per cent. For one-year period, the rate has been set at 9.40 per cent, it said.
SBBJ has reduced MCLR rate by 0.1 per cent across the board. The one-year MCLR rate is reduced to 9.45 per cent from 9.55 per cent, the bank said.
Banks have moved to MCLR as their new benchmark lending rate from June. Based upon this new system, interest rate for different types of customers is determined in accordance with their riskiness to ensure fair interest rates to borrowers as well as banks.
It also seeks to address the regulator’s primary objective of expediting monetary policy transmission along with augmenting uniformity and transparency in the calculation methodology.