Three premier Public Sector Banks, including State Bank of India (SBI) today slashed their benchmark lending rates up to 90 basis points. The other two banks are Punjab National Band and Union Bank. This decision was taken by them following the Prime Minister Narendra Modi’s directions to the banks to pay special attention towards the need of poor and middle calls in his address to the nation last night.

Country’s largest bank, SBI, in a statement said, it has reduced marginal cost of funds based lending rate (MCLR) by 0.9 per cent from 8.90 per cent to 8 per cent for one-year tenure. The base interest rate for other tenures, including one month, three months and six months, has been slashed by 0.9 per cent.

MCLR has been reduced by 0.9 percentage points to 8.10 per cent for two-year term and 8.15 per cent for three-year tenure. Other public sector lenders Punjab National Bank and Union Bank of India too have brought down the benchmark interest rate by up to 0.9 per cent.

PNB has cut its one-year MCLR rate by 0.7 per cent to 8.45 per cent from 9.15 per cent, effective today. Lending rate was moderated by similar percentage points for 3 years and 5 years period to 8.60 per cent and 8.75 per cent, respectively.

Similarly, Union Bank of India has reduced its MCLR by 0.65-0.9 per cent to 8.65 per cent, effective today. The revised one-year MCLR stands at 8.65 per cent.

Welcoming rate reduction by banks, Economic Affairs Secretary Shaktikanta Das said in a tweet, that trend of interest rate reduction follows demonetisation as Banks have substantial quantum of low cost funds now. He added that loan disbursements are expected to pick up which he said will be positive for the economy.

Last week, SBI’s subsidiary State Bank of Travancore had announced reduction in the lending rate, followed by another public lender IDBI which cut base interest rate by up to 0.6 per cent.