State Bank of India (SBI), the largest lender in the country, has reportedly lowered its Marginal Cost of Funds based Lending Rate (MCLR) by five basis points (bps) across all maturities.
The one-year MCLR on which retail loans such as home loans and auto loans are benchmarked have been reduced by five bps from 7.85% p.a. from the previous 7.90% p.a.
According to the State Bank of India’s official statement, the revised MCLR will be effective from 10 February 2020. A reduction in the MCLR means that retail loans like housing loans and vehicle loans will become more affordable to loan borrowers.
This is the ninth consecutive month the nation-wide lender has decided to slash its MCLR during FY 2019-20. In the same line, SBI has also reportedly reduced the interest rate on retail and bulk term deposits across various maturities.
SBI announced that the interest rate on term deposits had been reduced by 10-15 bps across the tenors.
The revised interest rates on Bulk Term Deposits, i.e. deposits of Rs 2 crore or more and Retail Term Deposits, i.e. lower than Rs 2 crore will come into effect from 10 February 2020.
The lender also added that the surplus funds on which it was sitting on were the reason why the interest rates were being slashed.
According to reports, Retail-Personal Advances which grew by over 17% in 2019 led to the lender’s credit surging by over 6.8% to Rs.23,01,669 crore during the same period.
December 2019 witnessed bank deposits surging to Rs 31,11,229 crore as SBI registered an increase of 9.9% in deposits during the previous 12 months.
According to a recent report released by the Reserve Bank of India, the system has been able to maintain surplus funds, ensuring enough liquidity in the system during the last two months.
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