State Bank of India cuts MCLR by 10 bps across tenors, loans to get cheaper

The country's largest lender, State Bank of India (SBI) announced early Wednesday morning that it has reduced MCLR (marginal cost of lending rate) on loans across all tenors. According to the SBI website, the public sector lender has reduced interest rates by 10 basis points (bps) across all tenors with effect from tomorrow, that is, October 10. (1 basis point = 0.01%). As per the SBI press release, "The one-year MCLR would come down to 8.05 percent a year from 8.15 percent. This is the bank's sixth consecutive cut in MCLR in FY 2019-20."

SBI's repo-linked lending rate (RLLR) remains unchanged. SBI had come out with revised interest rate for its repo rate linked home loan scheme on October 1, 2019, under which the lowest rate has been revised from 8.05% (5.4%+2.25%+0.40%) to 8.2% (5.4%+2.65%+0.15%). The bank will charge the total spread or margin over and above the repo-rate in computing the interest to be paid by borrowers on new floating rate loans. The effective benchmark rate will be equal to repo rate plus 2.65 per cent.

Tenor-wise MCLRs effective from 10th October, 2019 will be as mentioned below:

The rate reduction is not applicable to the repo-linked loans. "In view of the festival season and extending the benefits to customers across all segments, we have reduced our MCLR by 10 bps across all tenors," the bank said in a statement.

SBI's MCLR cut follows close in the heels of RBI repo rate cut last week. Now we will have to wait and see if SBI will reduce rate on its RLLR linked loan as well.