SBI cuts lending and deposit rates

Mumbai:Following the Reserve Bank of India’s (RBI) repo rate cut, the country's largest lender State Bank of India (SBI) has reduced its lending rate by 25 basis points making home, auto and education loans cheaper for new and existing borrowers. However, your fixed deposits will also fetch lower returns as the lender also slashed deposit rates to protect its margins.

With the revision, SBI’s Repo Linked Lending Rate (RLLR) will drop to 8.25 per cent, while the External Benchmark Based Lending Rate (EBLR) will be reduced to 8.65 per cent. According to SBI’s website, the new rates will take effect from April 15, 2025. Already most nationalized banks including Bank of Baroda, Punjab National Bank, UCO Bank, Bank of India and Indian Bank, Indian Overseas Bank have cut their repo linked lending rate (RLLR) by 25 basis points. One basis point is one hundredth of a percentage point. However, banks have refrained from cutting their Marginal Cost of Fund based lending rate (MCLR) in a bid to protect their margins. MCLR loans are largely offered to companies.

So, while the new borrowers will be offered loans at lower rates, the exact date of rate cut transmission to the existing borrowers would depend on the interest rate reset dates set by their respective lenders. Till then, they will continue to service their loan as per their existing interest rate.

As per the central bank’s mandate issued in 2019, banks have to link their retail loans (such as home loans, car loans) to external benchmark lending rates (EBLR) which is mostly the repo rate of the RBI (RLLR). Banks can offer a spread on the repo rate based on the borrower’s profile.

SBI CUTS DEPOSIT RATES:--SBI also announced a cut in deposit rates by 10-25 basis points, which will again be effective from April 15. On fixed deposit up to Rs 3 crore, the interest rate on 1-2 year term deposits will be lower by 10 basis points to 6.70 per cent, and deposits having two years to less than 3 years maturity will fetch 6.90 per cent as against 7 per cent. For deposits over Rs 3 crore the rates have been cut by 20-25 basis points.

SBI has also brought back its special tenure scheme called ‘Amrit Vrishti’ but with lower rates. The specific tenor scheme of 444 days offers 7.05 per cent interest for general customers , 7.55 per cent for senior citizens and 7.65 per cent for super senior citizens.

Another public sector Bank of India has withdrawn its 400-day special deposit scheme which offered 7.3 per cent besides reducing interest rates on fixed deposits.

Meanwhile, private lender HDFC Bank has lowered interest rate on savings accounts by 25 basis points to 2.75 per cent which is the lowest among peers in the private sector. For balances above Rs 50 lakh, the rate now stands at 3.25 per cent as against 3.5 per cent. The reduction in rate is effective from April 12, as per the HDFC Bank's website.