Axis Bank reduced its lending rate by 5 basis points across all tenors

MUMBAI: Axis Bank has reduced its benchmark marginal cost of funds based lending rate (MCLR) by 5 basis points effective from October 18, following its peers ICICI Bank, Kotak Mahindra Bank, Syndicate Bank, Indian Bank and Canara Bank which had cut their lending rate after the Reserve Bank of India’s monetary policy review on October 4.

In a press release the private sector bank said it had reduced it MCLR across tenures effectively cutting its overnight lending rate 8.80%, while its three year lending rate is 9.35%. One basis point is 0.01 percentage point.

Axis’ rate move comes just a few days after the RBI reduced its benchmark repo rate by 25 basis points to 6.25%.

Earlier the bank’s peers had reduced their lending rate between 5 to 35 basis points.

The new MCLR regime, which was implemented from the current fiscal year, applies to all new borrowers and is closely linked to bank deposits rates. All new floating rate rate loans are now linked to MCLR.

The key difference between MCLR and the previous base rate regime is that the new rates are divided into different baskets corresponding to bank deposits.