The biggest bank in India, the State Bank of India, has followed suit and reduced their home loan rates. The one-year marginal cost of fund-based lending rate (MCLR) to 8.15 percent by implementing the ten basis points reduction. This is the fifth consecutive reduction in the MCLR rate by the SBI.
SBI has also launched repo linked loan rates, and now the borrowers will have the option to between the MCLR or repo linked interest rates for the loan. If the borrower chooses the repo rate linked interest rate, it will mean that the interest rate will change every time the RBI changes their repo rates.
Faster reflection of reduced rates:
As compared to the MCLR rates where the banks only change the rates once a year, the repo rates are set to change every two months. The loan borrowers, who opt for repo rate linked system, will have to keep a close eye on the benefits that the RBI is offering. This also means that if the repo rates are increased, the interest rate will increase too.The banks that have reduced their MCLR rates are SBI, Punjab National Bank, Central bank of India, ICICI Bank, and HDFC Bank. One percentage comprises of 100 basis points and the private banks ICIC bank and HDFC have already reduced their MCLR rates by 10 bps.
Current lending rates:
After the MCLR reduction, the MCLR rates stand as follows:- ICICI Bank: 8.60 percent
- Central Bank of India: 8.5 percent
- PNB: 8.4 percent
- SBI: 8.25 percent