|State Bank of India (SBI), the country’s largest lender, on Tuesday cut its marginal cost of funds-based lending rates (MCLR) by 5 basis points across tenures.|
“Interest rates on all loans linked to MCLR stand reduced by 5 bps with effect from July 10, 2019,” the bank said.
The MCLR will now stand at 8.40% for the one-year tenure, while the rates for shorter periods stand at 8.25% for six months, 8.10% for three months, 8.05% for one month and overnight lending.
This is the third rate cut by the bank in the current financial year. With this MCLR cut, the reduction in home loan rates since April 10, 2019 is 20 bps, the bank said.
On June 6, RBI cut the the repo rate by 25 bps and asked the banks to immediately pass on the benefits to their customers, as a result all the top lenders including ICICI Banks, Bank of Baroda and Punjab National Bank have been cutting their MCLR lately, by 5 to 10 bps.
So far in 2019, the RBI has made three rate cuts, amounting to a total 75 bps and indicated a further rate cut as it changed it stance to accomodatory from neutral in June 6 Monetary policy.
At the June monetary policy, RBI governor Shaktikanta Das observed that the weighted average lending rates (WALRs) across the system show that banks have transmitted to the extent of 21 bps on fresh rupee loans the 50 bps worth of rate cuts in 2019.
“Interest rates on lower-tenor money market instruments remain broadly aligned with the overnight WACR (weighted average call rate), reflecting near-full transmission of the reduction in policy rates,” Das said at the post-policy press conference, adding that the yield on the benchmark 10-year government security has also declined by about 40 bps from its average in April 2019 to about 7%.