SBI cuts policy rate by 15bp, mortgage loans get cheaper

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MUMBAI : India’s largest lender, State Bank of India (SBI), on Thursday announced a reduction in its marginal cost of the fund-based lending rate (MCLR) by 15 basis points across all tenors.

The one-year MCLR will drop from 7.40% per annum to 7.25% effective May 10. This is the 12th consecutive drop in the bank’s MCLR. The MCLR is based on the cost of equity in the bank.

Following the reduction, the assimilated monthly payments (EMI) on mortgage accounts linked to the MCLR will become cheaper in 255 for a 30-year loan of 25 lakh, the SBI said. However, the latest cut may not bring EMIs down immediately, as MCLR-based loans typically have a one-year reset clause.

SBI also cut its interest rate on term deposits (FD), citing adequate liquidity in the system, as well as with the bank.

SBI cut interest rates on retail term deposits by 20 basis points for terms of up to three years, effective May 12. This is the third FD rate cut in two months.

For seniors, the public sector bank has implemented a new deposit system, SBI Wecare Deposit. “Under this new product, an additional premium of 30 basis points will be payable for senior retail term deposits for a term of“ 5 years and over ”only.

This program will be in effect until September 30, the public sector lender said.

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