SBI account holder alert! Bank to reduce MCLR by 15 bps, home loans become cheaper

In a major move, country’s largest lender State Bank of India (SBI) has announced the reduction in its MCLR by 15 bps across all tenors. The 1 Year MCLR would come down to 8.25% p.a from 8.40% p.a. with effect from 10th Aug 2019. This is the fourth consecutive cut in MCLR in FY 2019-20. With today’s MCLR cut, home loans have become cheaper by 35 bps since April 10, 2019. In addition, SBI is offering a Repo Linked Home Loan Product w.e.f July 1, 2019.

Rajnish Kumar, Chairman, SBI said, ''The RBI decision to cut repo rates by an unconventional 35 basis points is perhaps a recognition that monetary policy works best with unanticipated surprises to market. The RBI has unveiled a host of bazooka measures to arrest the recent growth pangs even as it has marginally lowered its growth forecast for FY20. On the development and regulatory front, the decision to make available the NEFT platform on 24/7 basis, coupled with on-tap authorisation will add depth to retail payments (currently around 85 lakh transactions on a daily basis).''

With today’s cut in the Policy rate, SBI’s effective Repo Linked Lending Rate (RLLR) for CC/ OD customers will stand revised to 7.65% w.e.f. 01.09.2019.

SBI has effected full transmission of Repo rate cuts by RBI and has passed on the benefit of Repo rate reduction by 85 bps during the current financial year to its CC/OD customers with Limits above Rs.1 lakh.

''Reduction in risk weightage for consumer credit will free up capital from the banking sector for productive use. Similarly, permitting Banks to on-lend through NBFCs will facilitate credit flow to priority sectors. Meanwhile, SBI has decided to cut Repo linked lending rate by 35 bps and MCLR by 15 bps effective Aug 10,'' Kumar added. 

This came after the six-member monetary policy committee headed by RBI Governor Shaktikanta Das today decided to reduce key repo rate by 35 basis points to 5.40 per cent from 5.75 per cent on Wednesday with immediate effect. The repo rate now stands at the lowest level in almost 10 years.