SBI cuts base rate to 9.10% post merger

A man walks past a logo of State Bank of India outside a branch in New Delhi, India, February 1, 2017. REUTERS/Adnan Abidi

If you have a loan with State Bank of India, the bank has a treat for you. The new SBI, country’s largest bank, has cut its base rate by a sharp 15 basis points to 9.10 percent.

Base rate is the minimum lending rate below which banks cannot charge interest rate to all borrowers.

After the merger, the existing borrowers will get the new rates effective from April 1.

For new borrowers, the MCLR or the marginal cost based lending rate which was last reduced in January to 8 percent for a one-year loan and 8.15 percent for three-year loans, remains unchanged.

MCLR is the new lending rate calculation adopted from April last year. Borrowers prior to this were linked to base rates.

In January, SBI had said that about 10 percent of the total retail loans and 40 percent of corporate loans are linked to MCLR, while the rest are linked to base rates.

SBI chief Arundhati Bhattacharya had then said that existing borrowers could shift from the base rate to MCLR by paying a switch-over fee of 0.5 percent.

The bank’s retail loans grew at a healthy pace of 18 percent at the end of the December quarter while the home loan book grew at 18.32 percent and auto loans grew at 19.9 percent.