State Bank of India (SBI) has changed the marginal cost of funds based lending rate (MCLR) linked retail loan's reset frequency to 6 months as against 1-year earlier.It implies that any change in the repo rate by the Reserve Bank of India (RBI) gets transmitted to the borrower having a floating rate home loan linked to MCLR after a period of 12 months.
"Enjoy the benefits of a reduction in the interest rate without waiting for a year. SBI has reduced the MCLR reset frequency from 1 year to 6 months," SBI tweeted. The one-year MCLR of SBI against which home loans are typically benchmarked currently stands at 7 per cent. The six-month MCLR stands at 6.95 per cent. The public sector lender had in July announced a cut in its short term MCLR rats to enhance credit demand.
The MCLR was reduced by 5-10 basis points (5-10 percentage point). The new rates came into effect on July 10. "This is the 14th consecutive reduction in the Bank's MCLR. With this revision, SBI's MCLR upto 3 months tenor comes down to 6.65 per cent p.a., which is on par with the External Benchmark based Lending Rate(EBLR) of SBI," the public sector lender had then said. In June, SBI had reduced its MCLR by 25 basis points across tenors. The revised lending rates came into effect on June 10.
Meanwhile, SBI has recently announced a new voluntary retirement scheme (VRS) for its employees. The bank, through its scheme called 'Second Innings Tap-Voluntary Retirement Scheme-2020 (SITVRS-2020)' aims at optimising human resources and costs.