The State Bank of India (SBI), the country’s largest bank, on Sunday slashed its loan rates sharply by 0.90 percentage points across all tenure loans in one of the steepest cuts since the 2008 global economic crisis.
After the move, the so-called overnight marginal cost of lending rates (MCLR) fell to 7.75% from 8.65%.
The rate for one-year loans now stands at 8% (against the previous 8.90%), 8.10% for two-year loans and 8.15% for three-year loans.
Besides this, SBI’s women customers will be able to avail home loans at interest rates of 8.20% while others can avail it at 8.25%.
Helped by the substantial surge in deposits, the interest rate cut is expected to boost sentiments dampened by the government’s demonetisation move. The new loans rates came into effect from January 1.
{{/usCountry}}Helped by the substantial surge in deposits, the interest rate cut is expected to boost sentiments dampened by the government’s demonetisation move. The new loans rates came into effect from January 1.
{{/usCountry}}Similarly, the Union Bank of India reduced its one-year MCLR by 65 basis points, or 0.65%, to 8.65%.
IDBI bank and the State Bank of Travancore had also announced a cut in lending rates on Friday. IDBI bank borrowers seeking three-year loans will be charged 9.30% -- down 0.40% -- while six-month loans have been pegged at 8.90%, down 0.35%.
IDBI bank will charge 9.15% on one-year loans against the current rate of 9.30%.
An estimated Rs 14.9 lakh crore was injected into banks through deposits in the days following Prime Minister Narendra Modi’s announcement scrapping old Rs 500 and Rs 1,000 currency notes on November 8. This raised expectations that banks would cut lending rates to boost credit growth, and spark a revival in private investments.
Lower lending rates will be welcomed by the Reserve Bank of India, which cut the policy rate by 175 bps or 1.75% since the start of 2015 but felt that banks were being too slow in passing the benefits to customers.
Modi on Saturday asked banks to keep the interests of the public in mind and do their best to uplift the poor, the lower middle class and the middle class.