State Bank of India or SBI, the country's largest lender by assets, on Wednesday announced a reduction in its benchmark lending rates across all tenors. The bank said its MCLR or marginal cost of funds-based lending rates will be reduced by 10 basis points (0.10 percentage point), and the new rates will be effective from October 10. The move marks the sixth consecutive reduction in the key lending rates by SBI this financial year. MCLR reduction follows a 25 basis points cut in the repo rate by Reserve Bank of India (RBI) last week. Repo rate is the interest rate at which the RBI lends money to commercial banks.
"In view of the festival season and extending the benefits to customers across all segments, we have reduced our MCLR by 10 basis points across all tenors," the bank said in a statement.
From October 10, the MCLR will stand reduced to 8.05 per cent for the one-year tenor, as against the existing 8.15 per cent, according to SBI's statement.
The lender also announced a reduction in interest rates on savings deposits and term deposits or fixed deposits (FDs) across select maturities. On savings deposits, SBI has announced a revision from 3.5 per cent to 3.25 per cent on balances up to Rs 1 lakh. The new savings deposits interest rates will be effective from November 1, 2019. SBI has cut interest rates applicable to retail fixed deposits and bulk fixed deposits by 10 and 30 basis points respectively for '1 year to less than 2 years' tenor. The new FD rates will be effective from October 10, 2019.
The bank has earlier adopted repo rate as the external benchmark for all floating rate loans for micro, small & medium enterprises, housing and retail from October 1. In July, SBI had introduced floating rate home loans.
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