After SBI, Kotak Mahindra becomes first pvt bank to cut rates

After State Bank of India and few other public sector banks, Kotak Mahindra Bank becomes the first private bank to cut lending rates by up to 0.45% in the new year.

Kotak bank revised the Marginal Cost of Funds based Lending Rate (K-MCLR) downwards by up to 45 basis points (bps) or 0.45% with effect from January 1, 2017 for various tenors, it said on Monday.

Another public sector lender Dena Bank also announced a 0.75% rate cut in its MCLR to 8.55% from 9.30% for one year loans, effective from January 1.

For Kotak, the overnight MCLR stands at 8.20% (down from 8.60%) while the one-year rate is at 9% reduced from 9.20%. Its home loans are pegged at 6-months MCLR rates which are at 0.65%.

On Sunday, the first day of new year, country’s largest bank SBI announced the sharpest reduction in loan rates by 0.90% to 8%. This is the lowest in the industry now. SBI has pegged its loan rates at about 0.65% above the one-year MCLR rates.

Therefore, it will charge an interest rate of 8.65% on home loans up to Rs 75 lakh, while for women the interest rate would be 8.60%.For loans above Rs 75 lakh, the interest rate would be 8.65% for women and 8.70% for others. These are all term loans.

Similarly Punjab National Bank cut rates by 0.70% to 8.20%, Union Bank of India cut rates by 0.65% to 8.65%,

On Friday, IDBI Bank took the lead in reducing interest rates by 0.40% -one of the steepest in more than three years. Borrowers seeking three-year loans will be charged 9.30%, while six-month loans have been pegged at 8.90% and one-year loans at 9.15%.