Good news for all account holders of State Bank of India (SBI) as country's largest lender will be introducing some changes for its customers from May 1. In a first, the state-owned bank will be linking its loan and deposit rates to Reserve Bank of India (RBI's) repo rate. The new rule is expected to make the loans cheaper. Besides, customers of SBI savings account will get less interest on deposits of more than one lakh rupees.
Here are the key things to know about new SBI rules if you are a customer:
Lower interest rates for deposits above Rs 1 lakh:
All savings account holders of SBI will get less interest on deposits on above Rs 1 lakh. For balances up to Rs 1 lakh, SBI will offer an interest rate of 3.50 per cent per annum while for deposits above Rs 1 lakh, the interest rate will be 3.25 per cent.
Repo rate- interest rate linkage
SBI will link its key pricing decision for savings bank deposits and short term loans to the repo rate of RBI, with effect from May 1, 2019.
Banks usually finalise their loan interest rates on the basis of Marginal Cost of Fund Base Lending Rate (MCLR ). Mostly, banks do not pass the changes in repo rate directly to consumers. However, SBI is only bank to implement the linkage of repo rate to loan interest. The move is likely to make EMIs cheaper.
Following the repo rate cut by RBI, SBI has reduced its interest rate by 10 basis points or 0.10 per cent on home loans of up to Rs. 30 lakh. The interest rate on SBI housing loans or home loans below Rs 30 lakh now stands in the range of 8.60-8.90%.
SBI also reduced its benchmark MCLR by 5 basis points (0.05 per cent) across all tenors. The MCLR now stands at 8.50 per cent for the one-year tenor.