Economy

SBI cuts interest rates for home, auto loans by 5 basis points

SBI cuts interest rates for home, auto loans by 5 basis points”

India's largest state-owned lender State Bank of India (SBI) said it has reduced interest rates for retail loans in order to boost lending.‍.

SBI or State Bank of India has reduced its interest rate on home and auto loans. "The new rates will be effective November 1", SBI said in a statement. The effective interest rate for all eligible salaried customers will be 8.30 per cent per annum for loans up to Rs 30 lakh.

For auto loan customer, the loan amount ranges from 8.70% per annum to 9.20% per annum compared to earlier range of 8.75% to 9.25% PA.

The auto loans with the bank are now offered at 8.70% per annum from 8.75% previously. "The exact rate depends on the amount of loan and the credit score of the individual", the statement said.

For salaried women borrowers seeking loans of less than Rs 30 lakh, the bank will now charge 8.3 per cent and for loans between Rs 30 lakh and Rs 75 lakh, it will charge 8.40 per cent. However, India is experiencing lower inflation, therefore markets are betting on further reduction in the repo rate by RBI. One year MCLR rate stands at 7.95 per cent against 8 per cent earlier.

Since April 1, 2016, banks started following marginal cost lending rate (MCLR) as the new benchmark lending rate for new borrowers across all floating loans.

PK Gupta, MD for retail and digital banking at SBI said: "With this reduction in rates, we are offering lowest rates for most of our product offering in the retail loans". Despite a 25 basis points cut in August that reduced policy rate to 6 per cent from 6.25 per cent, banks didn't cut down MCLR. MCLR on a one-year term loan after this deduction 8.30 percent, which was 8.45 percent earlier. The internal study group had observed that the MCLR-based rate system had failed to effectively transmit monetary policy changes.

The MCLR on overnight borrowings has been reduced to 7.70% from 7.75%, while the lending rate for three-year tenure has been cut from 8.15% to 8.10%.



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