SBI loans cheaper by 5 basis point after cut in benchmark rate

SBI is India's largest commercial bank.

State Bank of India today cut its bechmark lending rates to make loans cheaper for its customers. India’s biggest lender cut its marginal cost of lending rate (MCLR) by 5 basis points, effecting the seventh cut in 2019-20. SBI’s benchmark lending rate is 8% effective November 10, 2019.

Most retail loans are fixed based on the key one-year benchmark lending rate. The country’s second largest lender, HDFC Bank, had pared its MCLR by up to 10 basis points earlier this week. The benchmark rate is linked to a bank’s deposit rates.

SBI also cut its fixed deposit rates by 15 basis points for deposits of one to two year maturities. The bank also cut bulk deposit rates across all tenors by 30-75 bps, citing good liquidity condition.

The government and the Reserve Bank of India have been prodding banks to cut lending rates. RBI has reduced the benchmark policy rate, repo rate, by 135 basis points this year. Several banks have linked their lending rates to an external benchmarks and reduced loan rates.

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