State Bank of India (SBI) on Wednesday announced a reduction in key lending rates for short-term loans, in a bid to boosts credit off-take and revive demand. The country's largest bank by assets said its MCLR or Marginal Cost-based Lending Rate will stand reduced by 5-10 basis points to 6.65 per cent for shorter tenors from July 10. That marked the fourteenth consecutive reduction in its MCLR, according to State Bank of India. The cut in the state-run bank's key lending rate will be applicable to loans for a term up to three months, and will have no impact on loans of longer tenures.
State Bank of India asserted that its MCLR continues to be at the lowest level in the market.
The reduction in the three-month Marginal Cost-based Lending Rate to 6.65 per cent is in line with SBI's External Benchmark-based Lending Rate (EBLR).
State Bank of India maintains its EBLR at 265 basis points - or 2.65 percentage points - above the repo rate, which is the key interest rate at which the Reserve Bank of India (RBI) lends short-term funds to commercial banks.
In May, the Reserve Bank of India had slashed the repo rate to 4 per cent, the lowest level recorded since 2000.
State Bank of India revises interest rates on loans from time to time to pass on the effect of changes in benchmark rates to its borrowers.
In June, SBI had brought down its Marginal Cost-based Lending Rate by 25 basis points (0.25 percentage point) across tenors.