Public sector lender Dena Bank on Monday slashed its benchmark lending rate by 0.75 per cent, following in the footsteps of bigger lenders like State Bank of India and Punjab National Bank. Dena Bank has reduced the marginal cost of funds based lending rate (MCLR) by 0.75 per cent to 8.55 per cent for 1-year tenor, reports PTI. SBI Slashes Lending Rate By 0.9 Per cent

With the reduction in the benchmark rate, home, car and other loans linked to MCLR would become cheaper. On Sunday SBI along with PNB and Union Bank of India, slashed lending rates by up to 0.9 percent. Following the reduction, the lending rate of SBI for a one-year loan has come down to 8 per cent from 8.90 per cent.

Banks are flush with deposits following demonetization. Banks have switched to MCLR as their new benchmark lending rate from June last year, replacing the base rate system for new borrowers. It is calculated on the marginal cost of borrowing and return on net worth for banks. It was introduced by RBI to ensure fair interest rates to borrowers as well as banks.

MCLR also seeks to address the regulator's primary objective of expediting monetary policy transmission along with augmenting uniformity and transparency in the calculation methodology of lending rates. MCLR rates are revised every month.

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