SBI Cuts Interest Rates on Home Loans, Fixed Deposits
Reduction in lending rates is directly linked to EMIs charged on loans.
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The country’s largest lender State Bank of India (SBI) on Monday, 9 September, announced a reduction in its marginal cost-based lending rate (MCLR) by 10 basis points (bps) or 0.1 percent.
With this lending rate reduction, the bank has lowered 40 bps so far this fiscal year in five successive rate cuts beginning April. The new rates are effective Tuesday, SBI said in a statement.
SBI attributed the falling interest rate scenario and surplus liquidity for realigning its loan and deposit pricing.
WHAT DOES THE RATE CUT MEAN?
Reduction in lending rates is directly linked to EMIs charged on loans. Thus, loans extended by the bank will get cheaper.
The interest rate on fixed deposits have also been reduced across all maturities by up to 25 bps.
WHAT’S THE BACKGROUND?
The cut in interest rates comes on the back of the Reserve Bank of India (RBI)'s 1.1 percentage point reduction in the repo rate – the key interest rate at which it lends short-term funds to commercial banks – so far this year.
Following the RBI’s rate reduction, Finance Minister Nirmala Sitharaman, in a press conference, had also asked the banks to pass on the benefits to the consumers.
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