10th February, 2020
Public sector Bank of Baroda (BOB) announced a cut in its Marginal Cost of Lending Rate (MCLR) by 0.10 percent on Monday. The new rates will be applicable from 12 February. Due to this deduction of the bank, home, auto, and other loans will be cheaper for new customers taking loans. According to the statement issued by the bank, after the rate cut, the one-year MCLR has come down from 8.25 percent to 8.15 percent.
A few days after the Reserve Bank (RBI) monetary policy review, the Bank of Baroda (BOB) has cut the MCLR. The RBI maintained the repo rate at 5.15 percent but has announced to buy up to 1 lakh crore securities at the repo rate. This will reduce the cost of funds for banks.
BOB has reduced the MCLR by 0.05 percent to 7.55 percent for one-month debt, while the one-day, three-month and six-month MCLR has been cut by 0.10 percent.
What is MCLR?
MCLR is the rate below which the bank cannot give loans.Obviously with this reduced, now the bank will be able to give a loan at a lower rate so that everything from house loan to vehicle loan is cheap for you.
But this benefit will be available to new customers as well as only those customers who have taken a loan after April 2016, because before that the minimum rate fixed for giving loan was called Base Rate. That is, banks could not give less than this.
Explain that after the RBI's monetary review, the country's largest bank SBI has reduced its MCLR. The bank has reduced this rate for the ninth time. Now the rate of MCLR has been reduced by 0.05% to 7.85% per year. These rates have come into effect from 10 February.