SBI reduces home & car loan rates

■ Waives minimum balance, SMS charges

Mumbai, March 11: The country’s largest lender, State Bank of India (SBI), has cut its marginal cost of fund-based lending rate (MCLR) by up to 15 basis points across various tenors effective March 10, a move which will make home and car loans cheaper. SBI has reduced its one-year MCLR by 10 basis points to 7.75% from 7.85% earlier. This is 10th consecutive cut in the current fiscal.

The country's largest lender State Bank of India (SBI) on Wednesday reduced interest rate on savings bank (SB) accounts to 3 per cent and also waived minimum balance requirement for such accounts. The bank also cut lending rates across all tenors.

SBI has 44.51 crore savings bank (SB) accounts. More banks are likely to follow the market leader in slashing interest rate on SB accounts and waiving minimum balance requirements.

The public sector behemoth cut interest rates on fixed deposits for certain tenors effective March 10. The retail term deposit (less than Rs 2 crore) interest rates have been reduced by 10 basis points for one year and above tenor and 50 bps for deposits up to 45 days. The term deposit interest rates on bulk deposits (Rs 2 crore and above) have been reduced by 15 basis points for deposits in "180 days and above" tenors.

Currently, the interest rate on SB accounts is 3.25 percent for deposits up to Rs 1 lakh in savings bank accounts, and 3 percent for deposits above Rs 1 lakh

SBI also cut its marginal cost of funds-based lending rates (MCLR) by 10 to 15 basis points across all tenors. SBI's one year MCLR to which home loans are linked will now stand at 7.75 per cent per annum from 7.85 per cent, with effect from March 10, 2020. This is SBI's tenth consecutive cut in MCLR this fiscal.

The bank said it has decided to do away with the requirement of maintaining average monthly balance (AMB) for all SB accounts besides also waiving off SMS charges that are levied quarterly.

Rajnish Kumar, chairman, SBI, announcing the waiver, said, "This announcement will bring in more smiles and delight to our valuable customers…We believe this initiative would empower our customers towards banking with SBI and boost their confidence in SBI."

SBI’s SB customers' needed to maintain AMB of Rs 3,000, Rs 2,000 and Rs 1,000 in metro, semi urban and rural areas, respectively. The bank used to levy a penalty of Rs 5 to Rs 15 + taxes on non-maintenance of AMB.

About the MCLR cut, SBI said, "EMIs on eligible home loan accounts (linked to MCLR) will get cheaper by around Rs 7 per one lakh on a 30-year loan. EMIs on car loans will also be reduced by Rs 5 per one lakh on a 7-year loan."