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Following SBI many more PSBs cut lending rate

Syndicate Bank on Friday said it has decided to link its deposits and loans to the repo rate for a wide range of products, its larger peers Bank of India, Union Bank and Allahabad Bank also said they are working on the modalities to launch similar products.

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Published : Aug 10, 2019, 1:32 PM IST

Updated : Aug 10, 2019, 7:16 PM IST

Mumbai: Despite RBI giving them more leeway due to their poor bottom lines, five more state-run banks on Friday announced linking their lending and deposit rates to the repo to facilitate faster transmission, following they're larger per State Bank, which had linked its deposits and loans to the repo from May.

While Syndicate Bank on Friday said it has decided to link its deposits and loans to the repo rate for a wide range of products, its larger peers Bank of India, Union Bank and Allahabad Bank also said they are working on the modalities to launch similar products.

"Housing, vehicle and consumer loans will now be offered at the basis of a repo-linked rate. With the change, the housing loans will start from repo plus 2.90 per cent at 8.30 per cent," Syndicate Bank said in a statement.

Its saving bank deposits over Rs 25 lakh will also be based on the repo rate, it added.

Bank of India said another dimension of rate transmission process is by way of offering repo linked lending rate to select customer segments, including personal loans.

"We are working out the necessary modalities in this regard so as to launch such products during the current month," Bank of India said.

Read More: Market participants demand rollback of higher surcharge on FPIs

Union Bank said to provide better interest rate transmission it shall soon link its housing and vehicle loan portfolio to repo rate from the current marginal cost of funds based lending rate.

Another state-owned lender Indian Bank too said it's home and vehicle loans will ink to the repo rate from August 15.

These loans will carry interest that changes with the repo rate and thus facilitate the quick transmission of the policy rate and will be effective from August 15, Indian Bank managing director Padmaja Chunduru said.

Allahabad Bank said it has reduced its MCLR by 15 to 20 basis points (bps) for different tenors, effective from August 14 while another public sector lender UCO Bank announced that it has cut the same by 15 bps across all tenors.

The move to link the deposit and lending rates by these four lenders come even as the Reserve Bank has not mandated them to do so.

In May, SBI had said it would link its short-term loans and large savings deposits rates to the repo rate and its home loans from July.

The nation's largest lender linked its savings accounts with deposits over Rs 1 lakh and all cash credit accounts and overdrafts or short-term loans with limits above Rs 1 lakh, to the repo rate.

In the post-policy meeting with the reporters, RBI governor Shaktikanta Das had said the central bank recognizes that banks are just about coming out of their NPA mess amidst slow deposit growth.

"So, administratively, we did not want to mandate it (external benchmarking) at that particular time; we are monitoring the situation and will take whatever steps are required to ensure better transmission.

Mumbai: Despite RBI giving them more leeway due to their poor bottom lines, five more state-run banks on Friday announced linking their lending and deposit rates to the repo to facilitate faster transmission, following they're larger per State Bank, which had linked its deposits and loans to the repo from May.

While Syndicate Bank on Friday said it has decided to link its deposits and loans to the repo rate for a wide range of products, its larger peers Bank of India, Union Bank and Allahabad Bank also said they are working on the modalities to launch similar products.

"Housing, vehicle and consumer loans will now be offered at the basis of a repo-linked rate. With the change, the housing loans will start from repo plus 2.90 per cent at 8.30 per cent," Syndicate Bank said in a statement.

Its saving bank deposits over Rs 25 lakh will also be based on the repo rate, it added.

Bank of India said another dimension of rate transmission process is by way of offering repo linked lending rate to select customer segments, including personal loans.

"We are working out the necessary modalities in this regard so as to launch such products during the current month," Bank of India said.

Read More: Market participants demand rollback of higher surcharge on FPIs

Union Bank said to provide better interest rate transmission it shall soon link its housing and vehicle loan portfolio to repo rate from the current marginal cost of funds based lending rate.

Another state-owned lender Indian Bank too said it's home and vehicle loans will ink to the repo rate from August 15.

These loans will carry interest that changes with the repo rate and thus facilitate the quick transmission of the policy rate and will be effective from August 15, Indian Bank managing director Padmaja Chunduru said.

Allahabad Bank said it has reduced its MCLR by 15 to 20 basis points (bps) for different tenors, effective from August 14 while another public sector lender UCO Bank announced that it has cut the same by 15 bps across all tenors.

The move to link the deposit and lending rates by these four lenders come even as the Reserve Bank has not mandated them to do so.

In May, SBI had said it would link its short-term loans and large savings deposits rates to the repo rate and its home loans from July.

The nation's largest lender linked its savings accounts with deposits over Rs 1 lakh and all cash credit accounts and overdrafts or short-term loans with limits above Rs 1 lakh, to the repo rate.

In the post-policy meeting with the reporters, RBI governor Shaktikanta Das had said the central bank recognizes that banks are just about coming out of their NPA mess amidst slow deposit growth.

"So, administratively, we did not want to mandate it (external benchmarking) at that particular time; we are monitoring the situation and will take whatever steps are required to ensure better transmission.

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Five more PSBs follow SBI, link deposit, loan rates to repo
         Mumbai, Aug 9 (PTI) Despite RBI giving them more
leeway due to their poor bottomlines, five more state-run
banks Friday announced linking their lending and deposit rates
to the repo to facilitate faster transmission, following their
larger per State Bank, which had linked its deposits and loans
to the repo from May.
         While Syndicate Bank Friday said it has decided to
link is deposits and loans to the repo rate for a wide range
of products, its larger peers Bank of India, Union Bank and
Allahabad Bank also said they are working on the modalities to
launch similar products.
         "Housing, vehicle and consumer loans will now be
offered at a rep0-linked rates basis. With the change, the
housing loans will start from repo plus 2.90 percent at 8.30
percent," Syndicate Bank said in a statement.
         Its saving bank deposits over Rs 25 lakh will also be
based on the repo rate, it added.
         Bank of India said another dimension of rate
transmission process is by way of offering repo linked lending
rate to select customer segments, including personal loans.
         "We are working out the necessary modalities in this
regard so as to launch such products during the current
month," Bank of India said.
         Union Bank said to provide better interest rate
transmission it shall soon link its housing and vehicle loan
portfolio to repo rate from the current marginal cost of funds
based lending rate.
         "The bank will be exploring to develop products of
both assets and liabilities linked with external benchmark to
transmit the benefits of rate cut to our customers shortly,"
Allahabad Bank managing director SS Mallikarjuna said.
         Another state-owned lender Indian Bank too said its
home and vehicle loans will inked to the repo rate from
August 15.
          These loans will carry interest that changes with the
repo rate and thus facilitate quick transmission of the policy
rate and will be effective from August 15, Indian Bank
managing director Padmaja Chunduru said.
         The move to link the deposit and lending rates by
these four lenders come even as the Reserve Bank has not
mandated them to do so.
         In May, SBI had said it would link its short-term
loans and large savings deposits rates to the repo rate and
its home loans from July.
         The nation's largest lender linked its savings
accounts with deposits over Rs 1 lakh and all cash credit
accounts and overdrafts or short-term loans with limits above
Rs 1 lakh, to the repo rate.
         In the post policy meeting with the reporters, RBI
governor Shaktikanta Das had said the central bank recognizes
that banks are just about coming out of their NPA mess amidst
slow deposit growth.
         "So, administratively, we did not want to mandate it
(external benchmarking) at that particular time; we are
monitoring the situation and will take whatever steps are
required to ensure better transmission.
         "It is better to allow the market forces to play.
Wherever the regulatory interventions are required, we will
take necessary regulatory measures," he had told reporters
Thursday after announcing a steep 35 bps repo cut to a nine-
year low of 5.4 percent. PTI HV DP
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Last Updated : Aug 10, 2019, 7:16 PM IST
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