Axis Bank, the country's third largest private sector lender, has announced a five basis-point, or 0.05 per cent reduction in its marginal cost of funds-based lending rate (MCLR) across tenures.
In a press release, the bank said that effective Thursday, the bank's one-year MCLR will stand at 9.25 per cent. Its reduced MCLR will stand at 8.85 per cent for overnight borrowings, at 8.90 per cent for a tenure of one month, 9.10 per cent for three months, 9.20 per cent for six months, 9.35 per cent for two years and 9.40 per cent for three years.
The MCLR regime came into effect from April 1 and replaced the older regime of lending linked to base rates. The move was enforced with a view to improve transmission of changes in repo rates made by the Reserve Bank of India (RBI).
This objective, however, has not been fully achieved yet and at its last monetary policy review on August 9, the central bank had said that it is reviewing the process of arriving at MCLRs. It is expected to come up with a fresh set of guidelines around it soon.