After State Bank of India (SBI) and Oriental Bank of Commerce (OBC), another state-owned bank - Syndicate Bank - has reduced its marginal cost of funds-based lending rate (MCLR) by 5 basis points for various tenors effective July 15. The benchmark one-year MCLR, which forms the basis of most consumer and personal loans will be at 8.6 per cent as compared with 8.65 per cent currently, said the bank statement.

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Overnight, one, three and six-month MCLRs have also been cut by 5 bps each to 8.15 per cent, 8.25 per cent, 8.45 per cent and 8.55 per cent respectively, according to the statement, adding that the base rate has been kept unchanged at 9.5 per cent. Notably, the benchmark prime lending rate (BPLR) also stands unchanged at 13.85 per cent. 

Earlier on Wednesday, Oriental Bank of Commerce (OBC) cut the marginal cost of funds-based lending rate (MCLR) by up to 10 basis points (bps) for various tenors with effect from Thursday. 

The bank also decided to reduce MCLR for overnight and one-month loan tenor by 10 bps to 8.20 per cent and 8.25 per cent, respectively. Earlier, MCLR for overnight and one-month tenor stood at 8.30 per cent and 8.35 per cent, respectively.

According to the bank statement, it also reduced MCLR for three-month, six-month and one-year tenor loans by 5 bps to 8.45 per cent, 8.55 per cent and 8.65 per cent, respectively. 

Meanwhile, on Tuesday, the State Bank of India had decided to lower its lending rates by 5 basis points across all tenors. Now interest rates on all loans linked to MCLR stand reduced by 5 bps with effect from July 10, 2019. Notably, it was the third cut by the SBI in this financial year. With the latest cut, the SBI Home Loan Rates since April 10, 2019 is reduced by 20 bps.

The State Bank of India is the first bank to link the interest rates to RBIs repo rate to pass on the benefits of rate cut to end consumers. The lender has already linked its home loan interest rates with repo rate with effect from July 1, 2019. 

Notably, Marginal Cost of Lending Rate (MCLR) replaces the earlier base rate system to determine the lending rates for commercial banks. Implemented on April 1, 2016 by RBI, it is an internal reference rate for banks to decide what interest rate they can levy on loans, and for this they take into account additional or incremental cost of arranging additional rupee for a prospective buyer.