Allahabad Bank cuts MCLR by 10 bps with effect from March 1

Kolkata: State-owned Allahabad Bank has taken the lead in lowering lending rates, following Reserve Bank of India's appeal last week for softer rates after after its 25 basis points repo rate cut failed to achieve monetary transmission.

Governor Shaktikanta Das nudged country's top bankers to lower lending rates at a meeting last week convened for the purpose.

Allahabad Bank, which exited the prompt correction action-based restrictions Monday, has reduced its marginal cost-based lending rate by 10 basis points across maturities effective March 1. "As a result, home, car loans and other retail loans are slated to get cheaper," the bank said Tuesday.


One basis point is equal to one hundredth of one percent.

ET in its edition dated February 23 has reported the possibility of token rate cuts.

Despite RBI's call, there were still doubts on how banks would lower lending rates when deposit rates remained sticky due to year-end pressure and tight liquidity.

After RBI's rate cut, State Bank of India was the lone lender to announce a symbolic 5 bps cut in home loan rates even as its chairman Rajnish Kumar said that there was no room for a reduction unless deposit rates are lowered. SBI kept MCLR unchanged while lowered the mark-up for home loans.