New Delhi: State Bank of India (SBI) announced a 5 basis point cut in its benchmark lending rates across maturity, which first cut after 10 months on Wednesday. The bank has pegged its benchmark rate to 7.95% for a term of one year with effect from November 1 against 8% year charged earlier. Most banks sharply reduced marginal cost of lending rates (MCLR) in January 2017, post demonetization exercise after they saw huge inflow of deposits.
The reduction in the lending rates also comes within weeks of Rajnish Kumar, taking charge at the helm for a term of three years. The bank will now pegged MCLR to 7.70% for overnight borrowing and 8.10% for three years. Other largest banks like ICICI Bank and HDFC Bank too may announce a token cut in the lending rates.
The new rates will immediately benefit the new borrowers. However, the existing customers may have to wait for a while since under the MCLR system the interest rates charged to the customers is locked for a fixed term. For home loans, the interest rates are fixed for a term of one year and thus the existing borrower will benefit at the end of the lock-in period. For salaried women borrower seeking loan of less than Rs 30 lakhs, the bank will now charge 8.30% and for loans between Rs 30 lakhs and Rs 75 lakhs it will charge 8.40%.
For non-salaried women borrower seeking loan less than Rs 30 lakhs the bank will now charge 8.40% and for loans between Rs 30 lakhs and Rs 75 lakhs it will charge 8.50%. For all other borrowers, the bank charges 5 basis points more above the rates charged to women borrower.