Mumbai: India’s biggest bank, State Bank of India (SBI) has cut its benchmark lending rates by 5 basis points across all tenors, making home, auto and other loans cheaper. The marginal cost of fund-based lending rate, or MCLR, was lowered to 8.50 per cent for the one-year tenor, down from 8.55 per cent, SBI said in a statement.
The move comes days after the Reserve Bank of India (RBI) cut its policy interest rate by 25 basis points to 6 per cent, in a move to boost the economy.
From May 1, the interest rate on large SBI savings accounts (balances above Rs 1 lakh) and other short-term loans like overdraft will also get revised.
SBI also reduced the interest rate on housing loans of up to Rs 30 lakh by 10 basis points. The applicable interest rate for SBI housing loans below Rs 30 lakh will range from 8.60 per cent to 8.90 per cent, from existing rates of 8.70 per cent to 9 per cent.
On Monday, the largest private sector bank, HDFC Bank Ltd had reduced its MCLR by 5-10 basis points. The private sector lender’s one-year MCLR stands revised at 8.7 per cent.
Beginning May 1, SBI will link savings bank deposits above Rs 1 lakh and short-term loans like overdraft with RBI’s repo rate in a move to improve interest rate transmission for consumers. On March 8, SBI announced the linking of savings bank account deposits (above Rs 1 lakh) and short-term loans to RBI’s repo rate. This will come into effect from May 1.
With SBI linking rates for such deposits and loans to the repo rate, the interest rate you were paying on a short-term loan like overdraft or cash credit will also come down by 25 bps and so will the automatic revision of interest rate on savings accounts with balance above Rs 1 lakh (275 bps below repo rate), which will fetch 3.25 per cent interest rate from May 1, the statement said.
SBI savings bank account customers with a balance up to Rs 1 lakh will continue to get 3.50 per cent. Ninety-five per cent of savings bank account holders fall into this category, SBI said.