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Top PSU lenders State Bank of India, Punjab National Bank and Union Bank on Sunday slashed their benchmark lending rates by up to 90 basis points, a day after Prime Minister Narendra Modi asked banks to priorities their lending towards the poor and 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.

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

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. The revised one-year MCLR stands at 8.65 per cent.

Welcoming rate reduction by banks, Economic Affairs Secretary Shaktikanta Das said in a tweet, “Trend of interest rate reduction follows demonetization. Banks have substantial quantum of low cost funds now.”

“Welcome reduction of interest rates by SBI. Loan disbursements expected to pick up. Positive for the economy,” he added.

State Bank of India (SBI) — the country’s largest lender — has reduced marginal cost of fund based lending rate (MCLR) across all loan products by a whopping 90 basis points. The new rate comes into effect from 1 January.

MCLR is the benchmark rate to which all loan products are linked.

Accordingly, the new home loan rate will be 8 per cent as compared to 8.9 per cent earlier.

The finance ministry have been prodding banks to cut rates sharply following huge sum of deposits that banks has received following the withdrawal of high value currency notes in November. The government argued, that since most of the deposits were in savings account, this has brought down cost of funds and hence the benefit should be passed to the borrowers.

Prime Minister Narendra Modi on Saturday, in his address to the nation, had also advised banks think about the welfare of the customers following the large gain in deposits.