State Bank of India or SBI has announced yet another cut in its lending rate, making EMIs on home and other loans tied to its marginal cost of funds based lending rate or MCLR cheaper. SBI has reduced MCLR by 25 bps across all tenors, with effect from June 10, 2020. This is the second reduction in bank’s MCLR in a month.
The one-year MCLR, against which home loans are typically benchmarked, comes down to 7% per annum from 7.25%. After the latest reduction, EMIs on eligible home loan accounts linked to its MCLR, for example, 30-year, ₹25 lakh loans, will get cheaper by Rs. 421.
SBI also cut its base rate by 75 bps, from 8.15% to 7.40%, with effect from 10th June 2020.
If you are an existing home loan borrower from SBI, the latest cut of 25 basis points on MCLR will however not bring down your home loan interest rate immediately. If your SBI floating rate home loan is linked to MCLR, you will have a reset clause and from that date the new rates will become applicable.
In addition, SBI has also passed on the entire 40 bps repo rate cut (announced by the Reserve Bank of India on 22nd May 2020) to its borrowers whose loans are linked to external benchmark linked lending rate (EBR) as well as repo linked lending rate (RLLR), from 1 July 2020.
Consequently, SBI's external benchmark linked lending rate will get reduced to 6.65% per annum from 7.05% from 1 July 2020. Similarly, SBI's repo linked lending rate (RLLR) gets reduced to 6.25% per annum from 6.65% per annum from 1 June 2020.
Home loans linked to EBR/RLLR will get cheaper by around Rs. 660, for a 30-year loan of Rs. 25 lakh, SBI said.
Last month, SBI had announced a 5-basis-point cut in savings deposit interest rates to 2.70%. This is the second reduction by SBI in its interest rates on savings bank deposits in this fiscal.
In April, the bank had cut savings bank deposit rates by 25 basis points (bps) to 2.75%.
About 21.8% of SBI's retail borrowers have availed the three-month moratorium on repayments, from March to May, offered by the bank, SBI said earlier this month.
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