The State Bank of India (SBI) announced a 15 basis points cut in its MCLR (marginal cost of funds based lending rate) within 2 hours of RBI's monetary policy review. As per its press release, the 1 year MCLR, on which most retail loans like home loans are based, would come down to 8.25 percent from 8.40 percent with effect from 10 August.

The country's largest lender said that it was its fourth consecutive MCLR rate cut in the financial year 2019-20. The Reserve Bank of India (RBI) cut its repo rate by 35 basis points to 5.40 percent following its monetary policy review on Wednesday. The announcement was made around 11:45 am.

SBI has been prompt in reflecting changes in the repo rate in 2019. In May, the lender switched to a new interest rate regime which linked large savings accounts with balance above Rs 1 lakh and along with short-term loans like overdraft and cash credit facility to RBI's repo rate. These products will immediately see their interest rates change on Wednesday.

In July, SBI launched a home loan product with repo rate-linked lending rate (RLLR).

Other commercial banks are likely to follow suit and cut their MCLR as well. A cut in MCLR will mean that customers will have to shell out lesser amount to pay their EMIs.