With this, the marginal cost of funds-based lending rate for three year loans has been cut to 9.4% and that for 1 year loan, has been cut to 9.25%.
The MCLR for one month is 8.90%. The new rate will be applicable to all new loans of the bank with effect from tomorrow.
MCLR is the new benchmark lending rate at which banks will now lend to new borrowers.
Till 31 March 2016, banks used the base rate as the benchmark rate to lend. The new rate is calculated based on four components— marginal cost of funds, negative carry on account of cash reserve ratio (CRR), operating costs and tenor premium.