New Delhi, Jan 2 (Agencies) : Home and auto loans are set to get cheaper as top PSU lenders State Bank, PNB and Union Bank today slashed their benchmark lending rates by up to 90 basis points, a day after Prime Minister Narendra Modi asked banks to prioritise their lending towards the poor and the middle class.

The country’s largest lender, SBI, has reduced marginal cost of funds based lending rate (MCLR) by 0.9 per cent from 8.90 per cent to 8 per cent for one-year tenure, the bank said in a statement.

Flushed with funds after demonetisation, the base interest rate for other tenures, including one month, three months and six months, has been slashed by 0.9 per cent.

MCLR has been reduced by 0.9 percentage points to 8.10 per cent for a two-year term and 8.15 per cent for a three-year tenure.

Other public sector lenders Punjab National Bank (PNB) and Union Bank of India (UBI) too have brought down the benchmark interest rate by up to 0.9 per cent.

PNB has cut its one-year MCLR rate by 0.7 per cent to 8.45 per cent from 9.15 per cent, effective today.

Lending rate was moderated by similar percentage points for 3 years and 5 years period to 8.60 per cent and 8.75 per cent, respectively.

Similarly, Union Bank of India has reduced its MCLR by 0.65-0.9 per cent to 8.65 per cent, effective today. The revised one-year MCLR stands at 8.65 per cent.

Banks have moved to MCLR as their new benchmark lending rate from June, 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 the RBI to ensure fair interest rates to borrowers and banks.