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SBI cuts MCLR by 10 bps: Your home loans to get cheaper
India's largest public sector bank, State Bank of India (SBI) has reduced its MCLR (Marginal Cost of Funds based Lending Rate) by 10 basis points. This is the fifth consecutive reduction in MCLR by the country's largest bank so far this financial year. After the latest rate cut, SBI's one-year MCLR will be 8.15 per cent per annum.
India's largest public sector bank, State Bank of India (SBI) has reduced its MCLR (Marginal Cost of Funds based Lending Rate) by 10 basis points. This is the fifth consecutive reduction in MCLR by the country's largest bank so far this financial year. After the latest rate cut, SBI's one-year MCLR will be 8.15 per cent per annum. The decision comes in the wake of Reserve Bank of India (RBI)'s 1.1 percentage point reduction in the repo rate - the key interest rate at which it lends short-term funds to commercial banks - so far this year.
The new rates from SBI will come into effect from September 10. Meanwhile, SBI has also reduced the interest rate on fixed deposits or FDs by 20-25 basis points. According to the statement issued by SBI, it has also reduced interest rates applicable to retail term deposits by 20-25 bps and bulk term deposits by 10-20 bps across tenors.
"In view of the falling interest rate scenario and surplus liquidity, SBI also realigns its interest rate on term deposits (TD) w.e.f. September 10. Bank slashes retail TD rates by 20-25 bps and bulk TD rates by 10-20 bps across tenors," SBI said. The bank said that this move was made to realign its interest rates on term deposits "in view of the falling interest rate scenario". Other banks are expected to follow State Bank of India's lead and cut their MCLR too.
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The rate cut also comes at a time when the government is looking to boost the economy.
The Reserve Bank of India has reduced repo rates by 110 bps this year to help the economic growth and has even urged the banks to pass on the benefits to customers. However, banks have cited stickiness of deposit rates, higher rates on small savings schemes as one of the reasons behind their inability to pass on repo rates.
Last week, the Reserve Bank of India had ordered all banks to link certain loans to the external benchmark-based interest rates from October 1.
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