The State Bank of India (SBI), India’s largest public sector lender, announced Wednesday morning that it has reduced its marginal cost-based lending rate (MCLR) by 5-10 bps for shorter tenor loans (i.e., up to three months). According to the bank’s press release, the new rates will be effective from July 10, 2020 and that it has cut rates of shorter tenor loans to boost credit off take and revive demand.
According to SBI’s press release, “This is the 14th consecutive reduction in the Bank’s MCLR. With this revision, SBI’s MCLR upto 3 months tenor comes down to 6.65 per cent p.a., which is on par with the External Benchmark based Lending Rate(EBLR) of SBI.”
The MCLR rate for 1-year, 2-years, 3-years is 7 per cent p.a., 7.2 per cent p.a., 7.3 per cent p.a., respectively. SBI’s MCLR continues to be the lowest in the market, as per the release.
Tenor-wise MCLR effective from July 10, 2020 will be as under:
|Tenor||Existing MCLR (In %)||Revised MCLR (In %)*|
Source: SBI Website
In June, the bank slashed its key lending rates, the MCLR and the external benchmark rate (EBR), by 25 basis points and 40 basis points respectively, across tenors. The one-year MCLR had come down to 7 per cent per annum.
The bank also passed on the entire 40 bps cut in repo rate (announced by the Reserve Bank of India in its monetary policy review) to its borrowers availing loans linked to external benchmark lending rate as well as repo-linked lending rate. With this SBI’s EBR and RLLR came down by 40 bps to 6.65 per cent and 6.25 per cent respectively.