On Monday, the State Bank of India (SBI) reduced its marginal cost of funds-based lending rate (MCLR) by 25 basis points (bps) across all tenors.
The cut, which becomes effective on 10 June will reduce the one-year MCLR to 7 percent and base rate to 7.40 percent. It is the public sector bank's thirteenth consecutive MCLR reduction as it extends the benefits of the recent repo rate cuts.
Since the COVID-19 outbreak, RBI has reduced its repo rate by 1.15 percent to a record low of 4 percent.
Note that since retail loans disbursed after 1 October are directly linked to an external benchmark as directed by the Reserve Bank of India's (RBI), only loans issued prior to the date will be affected by the MCLR cut.
"Consequently, EMIs on eligible home loan accounts linked to MCLR will get cheaper by approximately Rs. 421 and those linked to EBR/RLLR will get cheaper by around Rs. 660, for a 30 years loan of Rs. 25 lakh," SBI said.
The bank also said it is passing of the recent 40 basis repo rate cut announced by RBI on 22 May to its borrowers availing loans linked to the external benchmark linked lending rate (EBR) as well as repo linked lending rate (RLLR).
From 1 July, the EBR will stand reduced to 6.65 percent and the RLLR will stand reduced to 6.25 percent. This reduction will benefit retail and small business borrowers.
From 1 July, EBR will be at 6.65 percent and RLLR at 6.25 percent, SBI said in a statement.
The lending rate cuts come after the bank slashed its interest rates on retail term deposits by up to 40 basis points across all tenors, from 27 May, for the second time within a month.