It's great news for account holders of State Bank of India, Bank of Baroda and Allahabad Bank. The EMI (Equated Monthly Installments) of account holders in these banks are set to reduce. This might mean that customers of these banks will have more liquidity with them which they can allot for other purposes. These banks have reduced MCLR rates. Let's take a look at what exactly this means.

What is MCLR?

It is Marginal Cost of Fund-based Lending Rates

Confused?

Well to put it simply. MCLR is the minimum rate at which banks can lend money to us. So if MCLR is reduced, this may mean that the EMI will also reduce.

Allahabad Bank

The Allahabad Bank has reduced MCLR on loans with a maturity period of one year. The MCLR was 8.30 per cent. it has now got reduced to 8.25 per cent. For loans of the maturity period of 1 month, Allahabad Bank has kept the MCLR unchanged at 7.85 per cent

For loans for a maturity period of 3 and 6 months, there has been a reduction in MCLR by 3 to 5 basis points. 

The new rates are effective February 14 onwards.

State Bank of India

The State Bank of India has already reduced MCLR rates that have been effective from February 10. SBI has reduced MCLR by 0.05 per cent. Post this, the MCLR across loans of various maturity periods has come to 7.85 per cent. SBI has reduced MCLR nine times now.

Bank Of Baroda

Bank of Baroda followed in SBI's steps and reduced MCLR on February 12. From that day onwards, MCLR of loans of various maturity periods has got reduced from 7.65 to 7.60 per cent.