New Delhi: State-owned Bank of Baroda on Saturday reduced the marginal cost of fund (MCLR) based interest rates by 10 basis point across different tenors with effect from 7 November.

“We wish to inform you that the bank has revised MCLR with effect from November 7, 2016," it said in a regulatory filing. For five years tenor, the new rate will be 9.45% from 9.55% earlier; for three years and one year tenors, it will be 9.25% each.

Among other tenors, the lending rate for six months will be 9.20%; three month 9.15%, while overnight rate is fixed at 9%. MCLR is the new benchmark lending rate and replaces the base rate for new borrowers. It is calculated on the marginal cost of borrowing and return on net worth for banks. It has been introduced in June by the Reserve Bank of India to ensure fair interest rates to borrowers as well as banks.

MCLR is expected to address RBI’s primary objective of expediting monetary policy transmission along with augmenting uniformity and transparency in the calculation methodology of lending rates.

The MCLR rates are revised every month. Bank of India has also revised its rates under different tenor. The new rates, it said will be applicable from Monday.