Home loan borrowers have more reason to cheer as State Bank of India (SBI), the country’s largest lender, reduced its marginal cost of funds-based lending rate (MCLR) for the fifth time in the current financial year. The bank in a statement said that it has reduced the MCLR by 10 basis points across all tenures, bringing the one-year MCLR to 8.15 per cent. The new rates will come into effect from September 10, 2019.
SBI has also reduced interest rates on retail term deposits by 20-25 bps and bulk term deposits by 10-20 bps across tenures. It said that the move is in the wake of falling interest rates and surplus liquidity.
Many prominent banks have recently revised their lending rates after the Reserve Bank of India expressed its dissatisfaction over low transmission of rate cuts to consumers. In the last Monetary Policy Review, the RBI Governor Shaktikanta Das had said that the transmission of rate cuts has only been 29 basis points by the banks compared to the 75 basis points cut in the repo rate in the last three monetary policy Committee (MPC) review.
In another important move last week, RBI mandated banks to link loans to the external benchmark-based interest rates from October 1.
From July this year, SBI had also launched a new home loan product whose interest rates is linked to the repo rate fixed by the Reserve Bank of India (RBI).