The RBI policy stances seem to leave an impact on the banking industry. Banks are resorting to cut their prime lending rate (PLR).
Immediately after meeting the Finance Minister on Tuesday, state-run Canara Bank and Bank of India have slashed their benchmark prime lending rate by 75 basis points. PLR for both the banks have come down to 13.25% from 14%.
After the meeting with the Finance Minister, heads of banks including UCO Bank and IDBI Bank have also announced reduction in benchmark Prime Lending Rates (PLR) by 50 basis points.
Punjab National Bank and Union Bank of India are also among the others that have declared a 50 basis points cut down to 13.5% in their PLR.
These cuts will lower the lending rates and make loans cheaper for the consumers. PLR is a benchmark rate and any changes in it affect the interest rates of the banks. Interest rate charged on a loan change in the same direction of in which the PLR changes.
In fact an official from Canara Bank said that home and auto loans offered by the bank would come down by 25 basis points. Also the deposit rate of 500 days to 2 years tenure has been decreased to 10% from 10.5% and will come into effect from December 1st, added the official.
The PLR cut of Canara Bank is effective from November 10th where as Bank of India has made the reduction valid from November 6th only.