Kotak Mahindra Bank cuts down base rate by 10 bps

All categories of loans (other than the exceptions permitted by the RBI) will be priced with reference to the revised base rate, Kotak Mahindra Bank said in a state. Representational Image. Image Source: ZeeBiz WebDesk

Following recent base rate cut moves by ICICI Bank and Bank of India (BOI), Kotak Mahindra Bank has now revised its base rate downward by 10 basis points to 9.40% per annum on Thursday.

"Kotak Mahindra Bank has revised its base rate downward by 10 basis points to 9.40% per annum with effect from October 7, 2016," the bank said in a filing to the BSE .

All categories of loans (other than the exceptions permitted by the RBI) will be priced with reference to the revised base rate, Kotak Mahindra Bank said in a statement.

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In order to make loans cost-effective, Reserve Bank of India's (RBI) new Governor Urjit Patel in his first bi-monetary policy meet on October 4 had announced 25 basis points rate cut in the central bank's repo rate -the rate at which the RBI lends to banks- to a six year low of 6.25%.

The recent rate cut move by ICICI Bank, Bank of India (BOI) and Kotak Mahindra Bank has come after Patel said in the monetary policy meet that the central bank has cut the rates but banks have not passed on the rate cut benefit to final consumers.

"Transmission of interest rate cuts by banks has not been up to the mark despite the 150 basis points rate cut by the RBI since January 2015 but the central bank hopes the recent cuts in small savings rates will lead to lower deposit rates and ultimately will reduce borrowing rates," The Economic Times reported quoting Patel as saying on Wednesday.

At 10:48 hours, the stock of Kotak Mahindra Bank was trading down 0.36% or Rs 2.80 at Rs 779.55 on the BSE on Friday.

See LIVE stock updates of Kotak Mahindra Bank here-

Moreover, Oriental Bank of Commerce late on Friday morning announced a revision in the MCLR rate on loans of different tenors with effect from October 10 this year, the bank said in a filing to the BSE.

MCLR is Marginal Cost of Funds based Lending Rate. This, simply put, is the benchmark interest rate that banks use to lend money to its customers of various loans, like home, car, personal, etc.

As per the revised rates, the new MCLR rate of Oriental Bank of Commerce for overnight loan stands at 9.10% while it is 9.40% for the one-year loan, the release said.

At 12:09 hours, the stock of Oriental Bank of Commerce was trading up 0.39% or Rs 0.50 at Rs 129.35 on the BSE.

See LIVE stock updates of Oriental Bank of Commerce here-