India’s largest public sector bank, State Bank of India (SBI) has withdrawn the repo-rate linked home loan scheme which had been launched in July. While responding to a query by a customer on the charges associated with the conversion of existing home loan to SBI’s RLLR-linked loan, SBI tweeted: “Kindly note that RLLR based home loan scheme have been withdrawn. You can get the home loan migrated to MCLR based home loan.” RLLR refers to repo-linked lending rate.
Earlier, this month the Reserve Bank of India (RBI) had mandated all the banks to link all retail and small and medium-sized enterprises (SME) loans to an external benchmark from October 1. SBI was the bank to make a move in this regard much before RBI mandate.
The bank also reportedly removed details of the repo-rate linked loan scheme from its website a week ago.
While mandating the banks to links its loan schemes to external benchmark, the RBI has said that that banks have been allowed to choose between the repo rate, the government’s three-month and six-month Treasury Bill yield published by the Financial Benchmarks India Pvt. Ltd (FBIL), or any other benchmark market interest rate published by FBIL. The interest rate under an external benchmark will be reset at least once in three months, it said.
It is widely expected that SBI may launch a new home loan scheme with interest rates linked to external benchmark from October this year.