New Delhi: UCO Bank has revised lending rates based on marginal cost of funds with effect from April 1.
For one-year loan, the interest rate will be 9.55 per cent while for two years it is going to be 9.65 per cent, the public sector lender said in a filing to the BSE.
The rate of interest will be 9.40 per cent for loan of one month duration, 9.45 per cent for loans for three month and 9.50 per cent for six months.
The Reserve Bank of India RBI had asked banks to price fixed rate loans of up to three years based on marginal cost of funds from April 1.
The lending rate based on marginal cost of funds is lower than base rate in some cases resulting in lower EMIs for borrowers. Most of the banks were deciding lending rates based on their average cost of funds.
A number of lenders, including State Bank of India (SBI), ICICI Bank, HDFC Bank, Axis Bank and Bank of India, have shifted to lending rates based on marginal cost of funds.
Other banks that have adopted new methodology for calculating lending rates include Kotak Mahindra Bank, Yes Bank, IDBI Bank and Oriental Bank of Commerce.