In good news for home loan borrowers, State Bank of India (SBI) cut its marginal cost of funds-based lending rate (MCLR) by five basis points across tenors from its previous benchmark rates, just days after the Reserve Bank of India (RBI) reduced rates. The country’s largest lender cut 1-year MCLR by 5 basis points to 8.50 per cent from 8.55 annually with effect from April 10, 2019.
SBI also cut interest rates by 10 basis points on loans up to Rs 30 lakh. The interest rates would now range between 8.60 per cent to 8.90 per cent annually on housing loans up to Rs 30 lakh, the bank added. The existing rates are 8.70 per cent to 9.00 per cent.
Similarly, the bank also revised savings rates from May 1. The public sector bank will now offer annual interest rate of 3.50 per cent for balance up to Rs 1 lakh, while balance above Rs 1 lakh would get interest of Rs 3.25 per cent.
In line with the RBI wishes, which wants more effective transmission of a change in the repo into loan rates, the public lender recently decided to link loan rates to an external benchmark. From May 1, cash credit and working capital (WC) loans of above Rs 1 lakh will be priced at 225 basis points above the repo rate, or 8 per cent.
Meanwhile, the central bank slashed the key policy repo rate by 0.25 per cent, and it now stands at 6 per cent. The interest rate cut is done to lower the cost of borrowing for the banks, thus the consumers will also have to pay lesser interest on loans. However, this also means that the consumers will receive lower fixed deposit interest rates.