Flushed with deposits, state-owned Bank of Baroda (BoB) on Tuesday cut benchmark lending rates by 0.2%.
The new marginal cost of funds based lending rate (MCLR) will be effective from November 1, BoB said.
The bank has reduced (MCLR) by 0.2% from 9.25% to 9.05% for one-year tenure, it said.
For three months, MCLR has been reduced by similar percentage points to 8.95% and for six months, the rate will be 9%.
ALSO READ: Bank of Baroda net profit rises by 343.54%; provisions for bad loans decline
On Monday, another leading public sector lender reduced its MCLR rate by 0.05% on select maturities. Banks have moved to MCLR as their new benchmark lending rate from June, 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 Reserve Bank of India (RBI) to ensure fair interest rates to borrowers as well as banks.
It 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.
The stock of Bank of Baroda (BoB) closed down 0.15% or Rs 0.25 at Rs 162.25 on the BSE on Tuesday.
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04:53 PM IST
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