SBI Reduces Lending Rates by 15-bps Across Tenors Comes Out With Special Scheme for Senior Citizens

Must Read:

  • SBI cuts lending rates by 15 bps across all tenors.
  • SBI’s 1 year MCLR comes down to 7.25% p.a from 7.40% p.a. with effect from May 10, 2020.
  • The lender has introduced a new product ‘SBI Wecare Deposit’ for Senior Citizens in the Retail Term Deposit segment.
  • Under this new product, senior citizens will get an additional 30 bps premium on term deposits with 5 years and above tenor, effective upto September 30, 2020. 
  • The bank has also cut interest rates on retail term deposit by 20 bps for upto 3-year tenor, effective from May 12.

State Bank of India (SBI) has announced a reduction in its MCLR or marginal cost of funds-based lending rate by 15 basis points across all tenors. The one-year MCLR will come down to 7.25% per annum from 7.40% per annum with effect from May 10, 2020. This is the twelfth consecutive reduction in the bank’s MCLR.

After the reduction, EMIs on eligible home loan accounts (linked to MCLR) will get cheaper by approximately Rs.255 for a 30-year-loan of Rs. 25 lakh, SBI said.

MCLR rates are based on the bank’s own cost of funds. If your home loan is linked to SBI’s MCLR rate, the latest cut may not bring down your EMIs immediately as MCLR-based loans typically have a one-year reset clause.

SBI also cut its interest rate on bank fixed deposits (FDs), citing adequate liquidity in the system as well as with the bank. SBI cut its interest rates on retail term deposits by 20 bps for tenors up to three years, effective from May 12, 2020. This is the third cut in FD rate in two months.

For senior citizens, SBI has introduced a new deposit scheme called SBI Wecare Deposit. “Under this new product, an additional 30 basis points premium will be payable for senior citizen’s retail term deposits with “5 Years & above” tenor only. This scheme would be in effect up to September 30, 2020,” the bank said.

Thus, the effective rate of interest for retail term deposits of senior citizens will be:

– 5 years and below tenor: 50 bps higher than the rate applicable for the general public (no change in premium)

– 5 years and above tenor: 80 bps higher than the rate applicable for the general public (30 bps extra premium).