Axis Bank lowers lending rate by up to 0.15% effective tomorrow

Country's third largest private lender Axis Bank on Friday announced up to 0.15% reduction in its lending rates, signalling a further downward trend in borrowing costs. The Ahmedabad-head quartered bank cut its overnight marginal cost of funding-based lending rate - the most competitive offering by rates - by 0.10% to 8.55%.

The MCLRs for all the other tenors were cut by 0.15%, it said in a statement, adding the revised rate structure is applicable from tomorrow. The one year MCLR -- which is crucial in determining the rate of interest for a slew of products including home loans -- has been set at 8.90%. The one-month MCLR is at par with the overnight rate of 8.55%, the three-month MCLR is at 8.75%, while the six-month will be 8.85%, it said.

The two-year MCLR has been revised down to 8.95%, while the three-year MCLR will be 9%, the bank statement said. MCLR replaced the base rate system of computation of rates from this April for faster transmission of RBI's rate actions into bank lending rates. Banks have been flush with liquidity following the demonetization exercise which has seen deposits of over Rs 12 trillion being made at the system level since November 8. Banks have responded by cutting the deposit rates, which is generally a pre-cursor to a lending rate cut.