State Bank of India (SBI) is offering repo-linked home loans at interest rates starting from 8.05 per cent. The new rates SBI - which introduced the repo rate-linked home loans in July this year - will be applicable to all existing and new loans from September 1, the state-run lender said. Repo rate is the key interest rate at which the Reserve Bank of India (RBI) lends short-term funds to commercial banks. The interest rate applicable to a repo rate-linked home loan will reflect any changes in the key interest rate by the RBI directly.
#SBI gives you an extra reason to celebrate! With the lowest interest rate of 8.05% based on the #Repo Linked Lending Rate, for your #HomeLoan this #festive season will definitely be more joyous.— State Bank of India (@TheOfficialSBI) August 19, 2019
Earlier, SBI decided the interest rates on its regular home loans from time to time.
SBI has a 2.25 per cent mark-up over the repo rate, which is 5.40 per cent. That makes the effective repo-linked lending rate (RLLR) at 7.65 per cent. A spread of 40-55 basis points is also added above the RLLR. One basis point is equal to one hundredth of a per cent.
The RBI is looking to get banks to link some new loans to its key policy rate or other external benchmarks, news agency Reuters quoted Governor Shaktikanta Das as saying on Monday.
SBI had earlier linked its savings bank deposits and short-term loans to the repo rate, becoming the first Indian bank to do so.
"Today, the economy requires a certain amount of push not just from the monetary policy but also from its transmission," Mr Das said. "I think the time has now come to formalise this linking of new loans to external benchmarks like the repo rate."
Since February, the RBI has cut the repo rate by 110 basis points. SBI has cut its benchmark lending rate by 35 bps since April 10.
(With Reuters inputs)
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