My Comment on an article "SBI and Bank of Baroda take lead in lowering lending rates based on new formula" published in the economictimes.com Dated 06/04/2016 at 12:10 pm.
"It is a good news that RBI has succeeded in compelling Banks to bring down their lending rates on the basis of Marginal Cost Lending Rate system (MCLR).
So, Banks will be now charging their rates quarterly applying MCLR calculations. The interest may be either decreasing or increasing quarterly according to their operational costs and market rates.
Even though existing home loan lenders may not get quarterly benefits as their rates will be fixed on yearly basis, they are now protected from any mid-year increase in rates also. They will not be charged higher rate if the rate increases in any quarter. Their rates will be determined yearly and continue throughout the year.
Only fresh lenders will get the current rates applied to their loans and their rates will also get fixed for one full year at prevailing rates on that particular day of sanctioning loan.
This is a kind of safe protection against any abrupt changes in the interest rates of each quarter. The present home loan rate charged by SBI for women is 9.40% and for men it is 9.45% as mentioned in above article which is much reasonable as compared to previous rates which used to be more than 10%."
"It is a good news that RBI has succeeded in compelling Banks to bring down their lending rates on the basis of Marginal Cost Lending Rate system (MCLR).
So, Banks will be now charging their rates quarterly applying MCLR calculations. The interest may be either decreasing or increasing quarterly according to their operational costs and market rates.
Even though existing home loan lenders may not get quarterly benefits as their rates will be fixed on yearly basis, they are now protected from any mid-year increase in rates also. They will not be charged higher rate if the rate increases in any quarter. Their rates will be determined yearly and continue throughout the year.
Only fresh lenders will get the current rates applied to their loans and their rates will also get fixed for one full year at prevailing rates on that particular day of sanctioning loan.
This is a kind of safe protection against any abrupt changes in the interest rates of each quarter. The present home loan rate charged by SBI for women is 9.40% and for men it is 9.45% as mentioned in above article which is much reasonable as compared to previous rates which used to be more than 10%."
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