India's largest public sector bank State Bank Bank of India has reduced its key lending rate by 5 basis points (bps) across all tenors effective from today. From now the State Bank customers will have to pay less interest as home loans will get cheaper. SBI has cut its benchmark interest rates by 0.05 per cent in the marginal cost of funds-based lending rate (MCRL).
After this relaxation, SBI's 1-year MCLR will reduce from 8.45% to 8.40% annually. This is the third reduction made by SBI in this financial year. With the latest MCLR cut, the reduction in home loan rates since April 10, 2019, is 20 bps,
Home Loan Gets Cheaper:
State Bank of India's (SBI) decision to cut down interest rates has made home loan and auto loan cheaper for individuals. It directly benefits its customers. SBI has cut interest rates days after RBI Governor Shaktikanta Das announced a reduction in the repo rate.
New MCLR Rates From July 10
Let us tell you that SBI's MCLR rates have come into effect from today i.e July 10, 2019. Apart from this, several other banks have also cut interest rates. After reviewing monetary policy in June, the repo rate was cut by 0.25 per cent by the Reserve Bank of India. Meanwhile, the next meeting of the Monetary Policy Committee will be held from August 5 to 9.
What is MCLR rate?
Let's state that a formula has been made to fix the lending interest rate for banks, which is called the marginal cost of fund lending rate i.e. MCLR. RBI has formulated this formula which is based on the marginal cost of their funds. Due to this formula, customers get the advantage of low-interest rates. Also, there is transparency in determining interest rates levy by banks. As of March 31, 2019, SBI bank had a deposit base of over Rs. 29 lakh crore.