SBI lowers term deposit, lending and savings rates

State Bank of India (SBI) Wednesday lowered its marginal cost of funds based lending rate (MCLR) by 10-15 basis points across tenors, besides lowering savings and deposit rates.

Following the cut effective 10 March, the one-year MCLR on which most loans are benchmarked now stands at 7.75%.

A basis point is one-hundredth of a percentage point.

The bank’s tenth consecutive MCLR cut in FY20 is expected to largely benefit its corporate borrowers and retail loans contracted before 1 October 2019.

In view of the festive season, the move extends the benefits of lower rates to customers across all segments, India’s largest lender said in a statement.

SBI outlined how this would translate into lower monthly loan repayments for customers. “Consequently, EMIs (equated monthly instalments) on eligible home loan accounts (linked to MCLR) will get cheaper by around ₹7 per ₹1 lakh on a 30-year loan and EMIs on car loans will also be reduced by ₹5 per ₹1 lakh on a 7-year loan.”

However, the reduction will not affect retail loans disbursed after 1 October, when banks moved to an external benchmark as directed by the Reserve Bank of India (RBI). Banks can now choose between the repo rate, or the yield on three-month or six-month treasury bills, or any other benchmark rate published by the Financial Benchmarks India Pvt. Ltd (FBIL).

The move will help existing retail SBI customers who borrowed before October 2019, and corporate loans which are yet to move to an external benchmark.

Meanwhile, citing adequate liquidity in the system, SBI also lowered its retail term deposit rates by 10 basis points for the one year and above tenors, and 50 basis points for deposits up to 45 days.

The bank also lowered its savings bank interest rate to 3% for all customers.

Earlier, it used to pay 3.25% on balances of up to ₹1 lakh and 3% on balances above ₹1 lakh.

In another development, SBI waived maintenance of average monthly balance (AMB) for all savings bank accounts. The charges for maintaining minimum balance were waived on all 445.1 million savings bank accounts, the bank said.

Currently, SBI customers need to maintain average balance of ₹3,000, ₹2,000 and ₹1,000 in metro, semi-urban and rural areas, respectively, and non-maintenance attracts a penalty of ₹5 to ₹15, plus taxes.