India's largest bank, State Bank of India (SBI), has lowered its lending rates by 5 basis points (bps) across all tenors with effect from today (10 July 2019). With this, the one-year marginal cost of funds-based lending rate (MCLR) now stands at 8.40 %. "1 Year MCLR coming down from 8.45 per cent p.a. to 8.40 per cent p.a ," SBI said in a statement. With this MCLR cut, home, car and other retail loans will get cheaper. "As a result, interest rates on all loans linked to MCLR stand reduced by 5 basis points with effect from July 10, 2019," the SBI said in a statement.
One basis point is one-hundredth of a percentage point.
This development comes a day after the Reserve Bank of India (RBI) governor Shaktikanta Das said he expected faster transmission of the three successive repo rate cuts.
This is the third rate cut in the current financial year. With Tuesday's MCLR cut, the reduction in the home loan rates since 10 April 2019 is 20 basis points, noted SBI.
From 1 July, the bank had also introduced repo rate-linked home loan products. So far, all new floating rate home loans were linked to marginal cost of fund based lending rate (MCLR) since August 2016. You will see a direct impact whenever the repo rate changes in case of repo rate-linked home loan.
After the 25 bps repo rate cut in RBI June policy, top lenders like ICICI Bank, HDFC Bank, Axis Bank revised rate of interest on fixed deposits, while Bank of Maharashtra, Corporation Bank, Oriental Bank and IDBI Bank had reduced their MCLR by 5-10 bps.
The next meeting of the monetary policy committee is scheduled for August 5-9, when a majority of analysts expect another rate cut.