State run lenders Union Bank of India and Dena Bank bring down their MCLR rates across various tenors by 20 and 15 basis points respectively. The new MCLR rates are effective from today. MCLR stands for Marginal Cost of Funds based Lending Rates.
Union bank cut MCLR rates by 20 basis points
Union Bank has cut its MCLR rate by 20 basis points across all tenors. The new one year MCLR has been set at 8.20 percent as against 8.40 percent earlier.
Six month MCLR has been cut to 8.05 percent while two and three years MCLR rate brought down to 8.25 percent and 8.30 percent.
Dena Bank cut by 15 basis points
Dena bank reduces MCLR rates by 15 basis points across across all tenors. The bank has fixed its one year MCLR rate at 8.40 percent from 8.55 percent.
The city based lender has revised downwards its overnight MCLR at 8.20 percent while one month period rate has been fixed at 8.20 percent.
MCLR rate has been fixed at 8.30 percent for three month period.
What is MCLR rate ?
MCLR – Marginal Cost of Funds based Lending Rate , a new methodology of setting lending rate by banks. It replaced the existing base rate system from April 2016 onwards. As per the latest guidelines issued by RBI, every bank has to prepare their own Marginal Cost of Funds based lending rates (MCLR) which will be internal benchmark or reference rate for the bank.
MCLR is based on four main components i.e. Marginal costs of funds, negative carry on account of cash reserve ratio (CRR), operating costs and tenor premium.