SBI cuts MCLR by 5 bps across all tenors

HYDERABAD: India’s largest lender State Bank of India (SBI) on Friday said it has reduced its marginal cost-based lending rate (MCLR) by 5 bps across all tenors. The move is expected to further lower home and auto loan rates. However, the bank also trimmed deposit rates sharply by 10-50 bps across various tenors.The revised rates will come into effect from Monday. According to the bank, in view of the surplus liquidity in the system, it will realign its interest rate on retail term deposits of less than `2 crore and bulk term deposits of `2 crore and above. Similarly, the one-year MCLR is now reduced to 7.85 per cent per annum from 7.9 per cent. This is the ninth consecutive cut in MCLR in FY20, the SBI said.

The overall banking system liquidity remained in surplus in December and January with average daily net absorption under the liquidity adjustment facility (LAF) aggregating `2.61 lakh crore as on December 2019, while the average daily net absorption of surplus liquidity soared to `3.18 lakh crore last month.
Though liquidity remained in surplus, overall credit offtake remained lacklustre. For SBI, credit growth stood at 6.8 per cent or roughly `23 lakh crore for the 12 months ended December 2019. 

Much of this was driven by retail loans including personal advances, which clocked a growth of 17.49 per cent, while corporate credit growth was subdued. While the country’s largest lender’s deposits increased by 9.9 per cent to around `31 lakh crore during the calendar year 2019, the share of low cost deposits — current account and savings account — in total deposits declined by 51 bps to 44.72 per cent from 45.23 per cent a year ago. Meanwhile, SBI chairman Rajnish Kumar last month said the bank was unlikely to meet its FY20 credit growth target and will likely settle in single digits. But, growth is expected to return to double digits next fiscal.