NEW DELHI : After a nudge from the Reserve Bank of India (RBI) to lower their marginal cost of funds-based lending rates (MCLR) following a cut in the repo rate, at least five banks have already reduced interest rates by 5-10 basis points while other banks are likely to follow suit soon.

India’s largest bank, the State Bank of India (SBI), which has shied away from revising its MCLR, reduced interest rates for home loans of up to 30 lakh by 5 basis points (bps) last month.

During the day, state-owned Bank of Baroda (BoB) announced that it will cut its benchmark lending rate by 0.1 percentage points with effect from March 7. BoB's MCLR for overnight and one-month tenors would be 8.25% and 8.30%, respectively.

During the last few days, Punjab National Bank (PNB), Allahabad Bank, Kotak Mahindra and Union Bank of India have also cut their MCLR.

With effect from March 1, state-owned PNB has reduced the MCLR by 0.10 percentage point for loans of various tenors. The interest rate on one-year tenor loans, against which most of the bank's consumer loans are benchmarked, has been cut to 8.45% from 8.55%, while the three-year MCLR has been cut to 8.65%.

Union Bank of India (UBI) has similarly reduced its lending rate by 10 bps. The state-run bank’s one-year MCLR or the minimum lending rate, against which most consumer loans are benchmarked, has been decreased to 8.60% from 8.70%.

Unlike PNB, UBI has also lowered its base rate by 10 bps to 9%.

Allahabad Bank has also cut its MCLR by 10 basis points for all loan tenures up to three years.

Among private sector banks, Kotak Mahindra Bank has lowered its lending rate by 5 basis points, taking its new one-year MCLR to 9%.

IANS reported today that four other PSU banks and a private bank are in the process of announcing rate cuts.

In its bi-monthly policy review last month, the RBI had cut the key repo rate by 25 basis points to 6.25%. Citing higher credit cost due to massive NPA piles and the resultant churning of margins, banks have, however, been reluctant in passing the benefit of RBI rate cuts to borrowers. Mint had reported last month that the heads of public and private sector banks have sought time from RBI Governor Shaktikanta Das to pass benefits of the RBI repo rate cut to borrowers.