New Delhi, September 9: Days after the Reserve Bank of India (RBI) called upon banks to completely pass on the benefits of repo rate reduction to the customers, the largest state-run lender State Bank of India (SBI) has complied with the directive. The bank on Monday announced a cut down in its Marginal Cost of Funds-based Lending Rate (MCLR) by 10 basis points (bps) across all tenors. What Caused RBI to Shift From Convention on Rate Cut.
With the 10 bps reduction, the SBI has lowered the one-year MCLR to 8.15 per cent from 8.25 per cent. The decision will come into effect from Tuesday, September 10, the bank said in its statement.
The move is expected to address the "liquidity crisis" situation in the Indian market. The cash flow, according to critics, is at its worst stage in the last 70 years.
Update by ANI:
State Bank of India (SBI) has announced a reduction in its Marginal Cost of Funds-based Lending Rate (MCLR) by 10 basis points (bps) across all tenors. The 1 Year MCLR would come down to 8.15% p.a. from 8.25% p.a. with effect from 10 September, 2019. pic.twitter.com/f9yJOBigM6
— ANI (@ANI) September 9, 2019
The concern on the current liquidity crisis was also expressed by Niti Aayog vice chairman Rajiv Kumar, who called the situation "unprecedented" in the last seven decades.
"This is an unprecedented situation for the government. In the last 70 years, we have not faced this sort of liquidity situation where the entire financial sector is in a churn, and nobody is trusting anybody else," Kumar had said last month.