Mumbai: The country’s largest lender, State Bank of India, on Friday cut its lending rate by 5 basis points, its second in one month. The bank also reported a net income of Rs 838 crore for the March quarter against a net loss of Rs 7,718 crore a year ago, aided by better asset quality and a fall in credit cost.
The bank on Friday cut its marginal cost of funds based lending rate (MCLR) by 5 basis points (bps) across all tenors, bringing down home loan and auto loan interest rates for its borrowers. SBI said its one-year MCLR has fallen from 8.50 per cent per annum to 8.45 per cent per annum.
"As a result, interest rates on all loans linked to MCLR stand reduced by 5 bps with effect from 10 May, 2019," the bank said in a statement.
However while new customers will get loans cheaper by 5 bps immediately, the benefit will not be immediate for old customers, for whom it will happen along with their loan reset cycle.
”This is the second MCLR rate cut in one month. After the April Monetary Policy the MCLR was reduced by 5 bps on April 10. With today’s MCLR cut, the reduction in the home loan rates since April 10 till date is 15 bps,” Rajnish Kumar, Chairman, SBI told reporters during the bank's earnings press conference.
The bank said interest rates on cash credit/overdraft limits above Rs 1 lakh have also come down by 25 bps with effect from May 1, after the repo rate cut of 25 bps on April 4.
Surprissingly, another state-owned lender, Bank of Baroda, announced that it has hiked its MCLR by 0.05 per cent with effect from May 7.
For the fixed deposits, SBI has revised the interest rates for tenor from one year to less than two years while it decreased the rate slightly for other long-term deposits.
On deposits which are ‘1 year to less than 2 year’, the rate of interest has been increased from 6.8 per cent to 7 per cent. For deposits which are ‘2 years to less than 3 years’, the rate has been decreased from 6.8 per cent to 6.75 per cent, for deposits which are ‘3 years to less than 5 years’, the rate has been cut from 6.8 per cent to 6.70 per cent. Similarly, rate of interest has been cut on deposits of ‘5 years and up to 10 years’ by 15 bps to 6.60 per cent.
The bank’s asset quality improved during the March quarter. Its net interest income (NII) rose 14.9 per cent to Rs 22,954 crore versus Rs 19,974 crore. Its gross non-performing asset was down at 7.53 per cent against 8.71 per cent, while net NPA was down at 3.01 per cent versus 3.95 per cent, QoQ.
