New Delhi: Private sector ICICI Bank Ltd on Friday cut its benchmark lending rate by 0.1%.

The new marginal cost of funds based lending rate (MCLR) will be effective from 1 November, ICICI Bank said. For overnight tenor, it will be lower by 0.1% to 8.75%, for 3 months 8.85%, one-year term 8.95%, it said.

Meanwhile, public sector Corporation Bank also reduced MCLR rate by 0.05% across the board.

Banks have moved to MCLR as its new benchmark lending rate from June, replacing the base rate system for new borrowers. It is calculated on the marginal cost of borrowing and return on net worth for banks.

It was introduced by Reserve Bank of India to ensure fair interest rates to borrowers as well as banks. It also seeks to address the regulator’s primary objective of expediting monetary policy transmission along with augmenting uniformity and transparency in the calculation methodology of lending rates.

The MCLR is revised every month.

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