People walk past the State Bank of India main branch office in Mumbai (Photographer: Prashanth Vishwanathan/Bloomberg News)

SBI Cuts Interest Rate By Five Basis Points On Home Loans Up To Rs 30 Lakh

Within a day of the Reserve Bank of India reducing repo rate by 25 basis points, the country’s largest lender announced a cut in interest rates by five basis points on its home loans up to Rs 30 lakh.

State Bank of India has the highest share of the home loans market and it’s appropriate to empower the large lower and middle class segment by transmitting the rate cut announced by the RBI, Chairman Rajnish Kumar said in a statement.

The bank’s deposit rates are much lower than peers, Kumar told reporters at an event in Mumbai today. A reduction in deposit rates, he said, will be required to cut the overall lending rates under the marginal cost of funds-based lending rate system.

For effecting a rate cut in home loans, the bank will either have to decrease its one year MCLR or can go for a cut in its spreads over MCLR for the product, he said, adding the new rates will be effective from Friday.

Within hours of the RBI move, state-run Bank of Maharashtra had announced a 0.05 percent cut in its MCLR for sixth-month loan tenor.

In a post policy conference with reporters, RBI Governor Shaktikanta Das had said he will speak to bankers to ensure a quicker and better transmission of the policy rates in a meeting scheduled to take place in two-three weeks.

On the external benchmark rate which the RBI wants to implement by April, Kumar said it is unlikely to be implemented as the operative guidelines on the same are yet to be released.

Also read: RBI Policy: There’s Room For Another Rate Cut, Say Economists