SBI cuts MCLR; will your home loan EMIs fall?

State Bank of India (SBI) has reduced lending rates by 15 bps across all tenors. The one-year lending rate now stands reduced to 7.25 percent from 7.40 percent, effective May 10. This is the twelfth consecutive reduction in bank’s MCLR, the lender said.

Consequently, equated monthly instalments (EMI) on eligible home loan accounts (linked to MCLR) will get cheaper by approx. Rs 255.00 for a 30-year loan of Rs 25 lakh.

In a move that will hurt retirees and those depending on interest income for their livelihood, India’s largest public sector bank has cut interest rates on retail term deposits by 20 bps for tenors up to three years. The cut, too, comes into effect from May 12.

However, the bank has introduced a new retail term deposit scheme for senior citizens. Under the new scheme, SBI Wecare Deposit, senior citizens will get an additional 30 bps premium on deposits of five years and above. This scheme would be in effect until September 30, 2020.

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).