Indian Bank links home, vehicle loans to repo rate
MUMBAI: Indian Bank on Friday announced that its new home and vehicle loan products would be linked to the Reserve Bank of India’s (RBI) repo rate, which will enable the bank to quickly pass on rate cuts to customers.
Details of the new products, it said, would be unveiled on August 15, the bank’s foundation day. RBI’s consecutive rate cuts, a higher -than-normal cut of 35 basis points on Wednesday, has spurred banks into action to announce cut in interest rate on loans. After State Bank of India, India Bank has also announced its move to link retail loan products the external benchmark of Repo.
Indian Bank said, it is “fully committed to transmission of policy rate cuts. The MCLR (marginal cost of funds-based lending rate) has already been revised downwards twice and further reduction is on the anvil”.
Indian Overseas Bank too announced reduction in MCLR by 15 basis points on one-year and above tenors and 10 basis points on one-year tenor effective August 10. IOB’s one-year MCLR would be at 8.50 per cent and three years at 8.70 per cent.
Mumbai-based Bank of India too echoed similar commitment to pass on the reduction in interest rates and effected a 25 bps cut in MCLR for loans under one-year tenor from August 10. The bank said 80 per cent of its loan book is falls under this category, which has so far this year seen 35 bps rate cut. “MCLR for other tenors have also been reduced. We have similar guidance for the coming months as well, when we will endeavor to pass on the benefits of rate cuts,” Bank of India said.
Bank of India as well as Union Bank of India said they are working on launching retail loan products linked to repo. Union Bank said since February the bank has cut interest rates by 30 bps and expects another 15 bps cut after this week 35 bps rate cut by the Reserve Bank.