State Bank of India (SBI) on Friday announced a reduction in its MCLR or marginal cost-based lending rates by 5 basis points across tenors. That marked the ninth cut so far in the current fiscal year. With effect from February 10, the one-year MCLR will be 7.85 per cent, SBI said in a statement. The announcement by the country's largest lender comes a day after the Reserve Bank of India (RBI) maintained the status quo on monetary policy amid high inflation, in line with economists' expectations.
SBI also lowered its fixed deposit (FD) rates by up to 50 basis points (0.5 percentage point) citing "surplus liquidity in the system".
In its statement on Friday, the bank said it reduced its retail FD rates by 10-50 basis points, and bulk FD rates by 25-50 basis points.
SBI also said the "impact of recent RBI policy measures and reduction in deposit rates will be reflected in the next review of MCLR".
In an effort to boost credit growth, the RBI introduced several temporary measures on Thursday, allowing banks to do away with the need to set aside extra cash reserves against incremental lending individuals and to MSMEs.
Analysts say the measures will help in restoring restore banks' confidence to lend and facilitating transmission of lower key rates to borrowers.
