NEW DELHI: A day after Prime Minister Narendra Modi asked banks to prioritise lending towards the poor and middle class, top public sector lenders - State Bank of India, Punjab National Bank and Union Bank - slashed their benchmark lending rates by up to 90 basis points on Sunday, paving way for significantly cheaper new loans.
The move, according to experts, is one of the steepest cuts since the global economic crisis in 2008 and is expected to revive demand in a market rendered sluggish by demonetisation. Even in the last monetary policy meeting, the RBI, after cutting key rates, had prodded banks to pass the benefits to consumers in the form of cheaper loans.
“The bank has reduced MCLR from 8.90 per cent to 8 per cent for 1-year tenure,” the SBI said. Flush with funds after demonetisation, the country’s largest lender has slashed base interest rates across all tenors by 90 basis points.
Other public sector lenders - PNB and Union Bank of India - too have slashed the benchmark rate by up to 0.9 per cent. Claiming that banks have substantial quantum of low-cost funds after demonetisation, Economic Affairs Secretary Shaktikanta Das tweeted that he expects loan disbursements to pick up soon, thereby impacting the economy positively.