SBI, IDBI, PNB shares in focus as banks slash MCLR rates
Domestic markets likely to open in red on the first day of the trading in New Year.
The banking sector will be in focus after banks flooded with liquidity as demonetisation activity ended on December 31.
With the liquidity, the largest bank, State Bank of India, on Sunday reduced its marginal cost of funds based lending rate (MCLR) by 90 basis points across maturities.
The new rates were effective from January 1, 2017, cited SBI in a press release.
The overnight MCLR rate now stands at 7.75% as against the existing rate of 8.65%. One-month tenure will attract a rate of 7.85%, while those for three and six months will be 7.90 and 7.95%, respectively.
Apart from SBI, state-owned IDBI Bank had also cut in its MCLR by 30-60 bps effective Sunday. The bank said it has effectively reduced MCLR by 30 bps to 60 bps across various tenures since April 2016.
Similarly, state-run Punjab National Bank also slashed its lending rates across maturities ranging from overnight to five years with the new rates effective from Sunday.
For loans of overnight tenure, the new MCLR will be 8.20%, instead of 8.90%. One-month tenure will attract a revised rate of 8.25%, while those for three and six months will be 8.35% and 8.40% respectively.
The lender cut down lending rates for the tenure of one year, three years and five years loans to 8.45%, 8.60% and 8.75% respectively.
Private sector Axis Bank cut its MCLR rates in November by 0.15-0.20%.
Other private banks are likely to slash MCLR rates soon.
According to estimates, banks have collected cash deposits of over Rs 14.9 lakh crore from demonetisation drive that ended on December 31.
Also, SBI's and other banks' MCLR cut, move came in post Prime Minister Narendra Modi's address to the nation on Saturday where he announced that the government will give rebate of 4% on interest rates for home loans for up to Rs 900,000 taken out in 2017 by middle class people.
Moreover, he also announced a series of incentives to the poor, farmers, women and small businesses.
On Friday, BSE Sensex closed at 26,626.46, up 260.31 points, or 0.99%. While, NSE Nifty ended at 8,185.80, up 82.20 points, or 1.01%.
(With IANS inputs)