New Delhi, February 9: The State Bank of India on Friday reduced the interest rate by five basis points on home loans up to Rs 30 lakh. The decision to reduce interest rates by the country’s largest commercial bank came just a day after the Reserve Bank Bank of India (RBI) reduced repo rate by 25 basis points. "On the back of the monetary policy announced by the RBI, we have taken the lead to cut interest rates on home loans up to Rs 30 lakh," the bank's chairman, Rajnish Kumar, said in a statement. The new rates are effective from Friday. New Rules for SBI Customers: These Banking Services May Take a Hit From December 2018.
Kumar said the bank has the highest market share of the home loans market and it is appropriate to empower the large lower and middle-class segment by transmitting the rate cut announced by the RBI. Talking to reporters at an event earlier on Monday, he further added that the bank's deposit rates are much lower than peers and pointed out that a reduction in deposit rates will be required to cut the overall lending rates under the MCLR system. Home Loans Set To Get Cheaper as RBI Cuts Repo Rate By 25 BPS to 6.25% in Monetary Policy.
For effecting a rate cut in home loans, the bank will either have to decrease its one-year Marginal Cost of Funds based Lending Rate (MCLR) or can go for a cut in its spreads over MCLR for the product. Within hours of the RBI move, state-run Bank of Maharashtra had announced a 0.05 percent cut in its MCLR for sixth-month loan tenor.
In its sixth bi-monthly monetary policy review announced on Thursday, the RBI had cut the repo rate by 25 basis points to 6.25 percent. After the conference, RBI Governor Shaktikanta Das had said that he would speak to bankers to ensure a quicker and better transmission of the policy rates in a meeting scheduled to take place in two-three weeks. Cash Withdrawal Limit From ATM Reduced to Rs 20,000 by SBI.
When asked about the external benchmark rate which the RBI wants to implement by April, Kumar said it is unlikely to be implemented as the operative guidelines on the same are yet to be released. The RBI also changed its policy stance to 'neutral' from 'calibrated tightening' on low inflation footprint. The RBI monetary policy estimated the GDP growth for 2018-19 at 7.2 per cent.
(With inputs from PTI)