The RBI decreased standard repo rate by 25 bps for the second successive time. Bank of Maharashtra on Friday, a day after this incident declared nominal 5 basis points decrease in its rate of lending across several tenors.
In the mass vote of 4:2, the Central Bank of India decreased the repo rate to 6% from 6.25 %. It was mentioned that the requirement of supporting growth was huge as it has lost traction in the initial bi-monthly financial policy that was stated on Thursday.
The Central Bank of India has also reduced its GDP forecast for the financial year 2020 to 7.2 % from 7.4 % that was predicted in the month of February review. It also reduced its inflation prediction from 3.8 % to 2.9 % for the year.
The Bank of Maharashtra based in Pune lowered its 1 year marginal cost of the fund based lending rate to 8.70% from 8.75 %. Most of the bank lending rates are related to this MCLR. The MCLR for 6 month, 3 month and 1 month have been amended descending to 8.50 % 8.45 as well as 8.25 % respectively.
Although the lender let its base rate remain the same at 9.50 %. It can be said that after this rate cut in the month of February, Bank of Maharashtra was the foremost lender who declared this nominal 5 basis points decrease in the costing of its 6 months products.
It has been reported by the Reserve Bank of India’s governor that even after two successive rate deduction by the financial authority, suitable and productive transmission is till absent. He also said that after the last held meeting with the banks, some have marginally decreased their MCLR (till 5-10 basis points) but it should be done more. The credit flows to the micro, small and medium business stayed indifferent but they have been enhanced for the large ones. The bank credit is spreading at 14.3 % but it is not one broad-based. The bank credit to micro as well as small business that are crucial to employment along with exports was uniform at 0.6 %. The credit to the medium industries was at 0.7%.