State Bank of India (SBI) on Thursday cut its Marginal Cost of Funds based Lending Rate (MCLR) by 15 basis points (bps) across all tenors. It also reduced interest rates on retail term deposits (below ₹2 crore) by 20 bps for a tenor of up to three years.
Further, India’s largest bank has introduced a new product for senior citizens, whereby their retail term deposits (TDs) with a tenor of five years or more will fetch them 80 basis points higher interest.
Following the 15 bps MCLR cut, which is effective from May 10, the one-year MCLR will come down to 7.25 per cent from 7.40 per cent. One basis point is equal to one-hundredth of a percentage point.
Consequently, EMIs (equated monthly instalments) on eligible home loan accounts (linked to MCLR) will get cheaper by about ₹255 (per lakh) for a 30-year loan of ₹25 lakh, SBI said in a statement.
Retail TD rate cut
In view of adequate liquidity in the system as well as with the bank, SBI said it has reduced its interest rates on retail TDs by 20 bps for a tenor of up to three years, effective from May 12.
Following the deposit rate cut, the bank will be offering 5.50 per cent interest on TDs in the one year to less than three years maturity bucket, against 5.70 per cent now.
The interest rate on maturity buckets between three years and up to 10 years continues at 5.70 per cent.
Senior citizens
In a bid to safeguard the interests of senior citizens in the current falling rate regime, SBI has introduced a new product called ‘SBI Wecare Deposit’ in the retail TD segment.
This product will earn senior citizens 80 bps higher interest rate than the rate applicable for the general public (30 bps extra premium). This additional premium will not be payable in case of premature withdrawal of such deposits.
For retail TD of a tenor below five years, senior citizens will continue to earn 50 bps higher than the rate applicable for the general public.