SBI cuts interest rates on fixed deposits, home loans
The State Bank of India on Monday announced that it has reduced marginal cost of lending rate (MCLR) and interest across all tenors.
SBI in a release said that it will reduce interest rates by 10 basis points from tomorrow. This is the rate reduction in the current fiscal year by the public sector lender.
MCLR rates are based on the bank’s own cost of funds. One year MCLR has been reduced to 8.15 percent from 8.25 now. The MCLR is linked to the retail lending rates. Other banks may also follow SBI’s step and reduce their MCLR.
The retail term deposit rates have been slashed by 20-25 bps and bulk term deposit rates by 10-20 bps. SBI said the decision was taken due to “falling interest rate scenario and surplus liquidity.” With a network of over 22,000 branches, SBI is India’s largest commercial bank.
The change in rates may not lower EMIs of existing home loan customers of SBI. The lender’s floating home loans usually have a one year reset clause and are linked to its one year MCLR
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The State Bank of India has about 35 per cent of the market share in home loans and 36 per cent of market share in auto loans.
The Reserve Bank of India had last week asked banks to link their lending rates on floating rate loans to retail, personal and MSME borrowers to an external benchmark from October 1.
The RBI said the interest rate under external benchmark will be reset once in three months. Over a dozen banks have already aligned their lending rate with the repo rate of the central bank. Soon, banks began linking lending rates to an external benchmark. State Bank of India, Punjab National Bank, Union Bank of India were among those who followed this lead.