Cutting base rates by SBI & HDFC is smart move, says Jefferies

Cutting base rates by SBI & HDFC is smart move, says Jefferies

Chennai: Large lenders have smartly cut their base rates to slow down the borrowers from switching to marginal cost of fund based lending rate (MCLR) and in the process protect their margins, said investment banking firm Jefferies.

In a statement issued on Thursday Jefferies said State Bank of India (SBI) and HDFC bank have reduced their base rates by 15 basis points (bps) and 25 bps, respectively.

"This is a smart move from these large lenders that should slow down the switching from base rate to MCLR by reducing the incentive to switch, in our view," Jefferies said.