State Bank of India (SBI), India’s largest public sector lender, announced Friday morning that it has cut marginal-cost based lending rates (MCLR) by 5 basis points across all tenors. The new rates will be effective from February 10.
After the cut, the one-year MCLR comes down to 7.85 percent per annum from 7.90 percent per annum. According to SBI’s press release, this is the bank’s ninth consecutive MCLR cut during the current financial year 2019-20.
SBI has also cut interest rates on fixed deposits (FDs). “In view of surplus liquidity in the system, SBI realigns its interest rate on Retail Term Deposits (less than Rs 2 Crore) and Bulk Term Deposits (Rs 2 Crore & above) w.e.f. February 10, 2020. The bank slashed Term Deposits rates by 10-50 bps in the Retail segment and 25-50 bps in the Bulk segment,” stated the press release.
The impact of recent RBI policy measures and reduction in deposit rates will be reflected in the next review of MCLR.
Tenor-wise MCLRs effective from February 10, 2020 will be as mentioned below
* 5 bps reduction in all tenors
Source: SBI Bank website
If loan is linked to MCLR
Since February 2019, the RBI has cut repo rate five times in a row by a total of 135 basis points (100 basis points/bps = 1 percent). Banks, too, have cut interest rates on loans since then. However, the quantum has been much less.
Sample this: As per the MCLR data available on SBI's website, between February 2019 and February 2020, the bank has reduced the MCLR by 70 bps.
The impact of a reduction in MCLR will only be felt once the reset date of your loan arrives. Usually, a bank offers MCLR-linked home loans with a reset period of six months or one year. Therefore, under the MCLR regime, the interest rate on a loan gets revised as per prevailing market conditions only on the loan's reset dates.
If you are servicing an MCLR-linked loan and want to switch to an externally benchmarked one, then as per the RBI circular, you can do it by paying administrative charges. While switching to a loan linked to an external benchmark, do check the spread and risk premium charged by the bank and compare these with those of other banks to know which one is offering a cheaper loan.
Revised fixed deposit interest rates effective from February 10, 2020
Source: SBI Website
After the cut, the one-year MCLR comes down to 7.85 percent per annum from 7.90 percent per annum. According to SBI’s press release, this is the bank’s ninth consecutive MCLR cut during the current financial year 2019-20.
SBI has also cut interest rates on fixed deposits (FDs). “In view of surplus liquidity in the system, SBI realigns its interest rate on Retail Term Deposits (less than Rs 2 Crore) and Bulk Term Deposits (Rs 2 Crore & above) w.e.f. February 10, 2020. The bank slashed Term Deposits rates by 10-50 bps in the Retail segment and 25-50 bps in the Bulk segment,” stated the press release.
The impact of recent RBI policy measures and reduction in deposit rates will be reflected in the next review of MCLR.
Tenor-wise MCLRs effective from February 10, 2020 will be as mentioned below
| Tenor | Existing MCLR (In %) | Revised MCLR (In %)* |
| Over night | 7.65 | 7.6 |
| One Month | 7.65 | 7.6 |
| Three Month | 7.7 | 7.65 |
| Six Month | 7.85 | 7.8 |
| One Year | 7.9 | 7.85 |
| Two Years | 8.1 | 8.05 |
| Three Years | 8.2 | 8.15 |
Source: SBI Bank website
If loan is linked to MCLR
Since February 2019, the RBI has cut repo rate five times in a row by a total of 135 basis points (100 basis points/bps = 1 percent). Banks, too, have cut interest rates on loans since then. However, the quantum has been much less.
Sample this: As per the MCLR data available on SBI's website, between February 2019 and February 2020, the bank has reduced the MCLR by 70 bps.
The impact of a reduction in MCLR will only be felt once the reset date of your loan arrives. Usually, a bank offers MCLR-linked home loans with a reset period of six months or one year. Therefore, under the MCLR regime, the interest rate on a loan gets revised as per prevailing market conditions only on the loan's reset dates.
If you are servicing an MCLR-linked loan and want to switch to an externally benchmarked one, then as per the RBI circular, you can do it by paying administrative charges. While switching to a loan linked to an external benchmark, do check the spread and risk premium charged by the bank and compare these with those of other banks to know which one is offering a cheaper loan.
Revised fixed deposit interest rates effective from February 10, 2020
| Tenors | Existing FD rates w.e.f. 10.01.2020 | Revised FD rates w.e.f.10.02.2020 | Existing FD rates for Senior Citizens w.e.f. 10.01.2020 | Revised FD rates for Senior Citizens w.e.f. 10.02.2020 |
| 7 days to 45 days | 4.5 | 4.5 | 5 | 5 |
| 46 days to 179 days | 5.5 | 5 | 6 | 5.5 |
| 180 days to 210 days | 5.8 | 5.5 | 6.3 | 6 |
| 211 days to less than 1 year | 5.8 | 5.5 | 6.3 | 6 |
| 1 year to less than 2 year | 6.1 | 6 | 6.6 | 6.5 |
| 2 years to less than 3 years | 6.1 | 6 | 6.6 | 6.5 |
| 3 years to less than 5 years | 6.1 | 6 | 6.6 | 6.5 |
| 5 years and up to 10 years | 6.1 | 6 | 6.6 | 6.5 |
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