UCO Bank cuts lending rate by up to 0.8%

Public sector lender UCO Bank today slashed its benchmark lending rate by up to 0.8 % in line with market competition.

The bank has reduced marginal cost of funds based lending rate (MCLR) by 0.7 % to 8.60 % for 1 year tenor, UCO Bank said in a filing to stock exchanges.

With the reduction in benchmark rate, home, car and other loans linked to MCLR would become cheaper.

The bank has lowered MCLR by 0.75 % to 8.50 % from 9.25 % for 6-month tenor, it said.

However, MCLR for the 3-month period has been decreased by 0.8 percentage points to 8.40 %.

Banks have switched to MCLR as their new benchmark lending rate from June last year, replacing the base rate system for new borrowers. It is calculated on the marginal cost of borrowing and return on net worth for banks. It was introduced by RBI to ensure fair interest rates to borrowers as well as banks.

MCLR also seeks to address the regulator's primary objective of expediting monetary policy transmission along with augmenting uniformity and transparency in the calculation methodology of lending rates. MCLR rates are revised every month.