SBI to launch cheaper repo-rate linked home loans from July 1; Cuts interest rates for some customers
SBI has also announced to pass on 25 bps repo rate cut to some cash credit borrowers.
Country's largest bank State Bank of India has decided to pass on the benefit of RBI rate cut to borrowers. SBI today said that it will launch home loans products linked to repo rate from July 1.
SBI has also announced to pass on 25 bps repo rate cut to some cash credit borrowers. The bank has cut repo-linked lending rate for Cash Credit/OD customers to 8%.
In a first, the State Bank of India, which controls nearly a quarter of the banking system, had in March announced linking of its savings deposits rates and short-term loans to the RBI's repo rate.
The new rates linked to the repo rate, came into effect on May 1.
Despite the RBI rate cuts, banks has been reluctant to reduce their lending and deposit rates. It can be recalled that banks were always slow to pass on the entire benefit of RBI rate cuts to borrowers, thus delaying the monetary transmission process. This had governors from the time of D Subbarao chiding banks for the delay.
This disconnect had forced Subbarao to end the BPLR (benchmark prime lending rate) regime. But this too did not have the desired effect as the new pricing regime was opened only to new borrowers and the existing borrowers, who are the vast majority lost out.
Following this, his successor Raghuram Rajan made bankers change the model and ushered in the base rate regime, again without much success on the monetary transmission front.
Then the last governor Urjit Patel ended the base rate regime and launched the MCLR (marginal cost-based lending rate) regime. Again banks were slow to move on the transmission front, forcing him to announce that from April 2019 all loan pricing will move onto an external benchmark. But the present governor Shaktikanta Das has lifted that deadline given the poor state of their balance sheets.
SBI has also announced to pass on 25 bps repo rate cut to some cash credit borrowers. The bank has cut repo-linked lending rate for Cash Credit/OD customers to 8%.
In a first, the State Bank of India, which controls nearly a quarter of the banking system, had in March announced linking of its savings deposits rates and short-term loans to the RBI's repo rate.
The new rates linked to the repo rate, came into effect on May 1.
Despite the RBI rate cuts, banks has been reluctant to reduce their lending and deposit rates. It can be recalled that banks were always slow to pass on the entire benefit of RBI rate cuts to borrowers, thus delaying the monetary transmission process. This had governors from the time of D Subbarao chiding banks for the delay.
This disconnect had forced Subbarao to end the BPLR (benchmark prime lending rate) regime. But this too did not have the desired effect as the new pricing regime was opened only to new borrowers and the existing borrowers, who are the vast majority lost out.
Following this, his successor Raghuram Rajan made bankers change the model and ushered in the base rate regime, again without much success on the monetary transmission front.
Then the last governor Urjit Patel ended the base rate regime and launched the MCLR (marginal cost-based lending rate) regime. Again banks were slow to move on the transmission front, forcing him to announce that from April 2019 all loan pricing will move onto an external benchmark. But the present governor Shaktikanta Das has lifted that deadline given the poor state of their balance sheets.