Indian Banks Cut Lending Rate Following PMs New Year Announcement
Indian Prime Minister Narendra Modi has urged the banking sector to prioritize lending towards the poor and MSMEs. This resulted with slash down of marginal cost of funds based lending rate (MCLR) by 0.9 percent from 8.90 percent to 8 percent for one-year tenure by State Bank of India (SBI) on Sunday.
The market reacted negatively on Monday with fall of 2 percent of the NSE Nifty PSU Bank index and 0.93 percent of the NSE Nifty Private Bank index.
Union Bank of India (UBI) and Punjab National Bank (PNB) too have cut the benchmark interest rates by up to 0.90 percent in the wake of new lending scenario.
Similarly the Bank of Baroda (BoB), IDBI and Canara Bank too slashed down by 2.87 percent, 0.43 percent and 0.10 percent respectively.
Angel Broking Fund Manager Mayuresh Joshi said, “The Prime Minister’s announcement is a welcome move for the sector. However, it is not just banks, but other sectors will also be affected by it. We are looking at what fineprint the Reserve Bank of India comes out of these policy announcement.”
The HDFC Bank, YES Bank, ICICI Bank and IndusInd Bank slipped between 0.60 and 1.87 percent.
Modi announced on the New Year’s Eve the loans of up to Rs 9 lakh under Pradhan Mantri Awas Yojana will get interest subversion of 4 percent and for up to Rs 12 lakh the interest waive will be 3 percent.