The country's largest bank State Bank of India (SBI) today cut lending rates, within hours after the Reserve Bank of India lowered interest rates for the fourth time this year. Other banks are also likely to review their lending rates soon. SBI today announced a reduction in its MCLR or marginal cost of fund based lending rate, by 15 basis points across all tenors. The revised rates will be effective from 10 August 2019. After the latest cut, SBI said home loans linked to MCLR rates are now cheaper by 35 bps since April 10, 2019.
The one-year MCLR comes down to 8.25% per annum, from 8.40% annum. This is the fourth consecutive cut in MCLR in FY 2019-20 by the bank, SBI said.
The six-member monetary policy committee (MPC) of the RBI today cut the repo rate by a bigger-than-expected 35 basis points to 5.40%. The RBI also maintained its "accommodative" stance.
Watch - RBI policy: MPC cuts repo rate by 35 basis points, 4th reduction in a row
From July 1 this year, SBI had started offering a repo rate-linked home loan product. The interest rate on this new home loan product gets revised automatically whenever there is a change in repo rate.
SBI had revised fixed deposit rates on August 1, cutting interest rates on FDs by 20 to 75 basis points.
From May 1, SBI linked interest rate on large saving account deposits (above ₹1 lakh) to repo rate. SBI's large savings accounts now offer an interest rate 275 bps lower than RBI's repo rate. This means effectively interest rate on large SBI savings accounts will get automatically fall to 2.65%. SBI savings accounts with deposits below ₹1 lakh will continue to fetch 3.5% interest rate.
With today’s cut in the RBI's repo rate, SBI’s effective Repo Linked Lending Rate (RLLR) for cash credit/overdraft customers will stand revised to 7.65%.
Also from May 1 this year, SBI had linked the interest rate on charged on cash credit/overdraft facilities with limits above Rs1 lakh to repo rate. SBI said has passed on the benefit of repo rate reduction by 85 bps during the current financial year to these customers.