Loans from SBI are expected to turn cheaper from this week by 30 basis points
State Bank of India (SBI) is set to adopt the repo rate as its external benchmark for all floating rate loans from October 1. The bank said on September 23 that it would adopt a repo rate-linked mechanism for faster transmission of policy rates, as per Reserve Bank of India's mandate.
In a September 4 circular, RBI said, "it is mandatory for banks to link all new floating rate personal or retail loans and floating rate loans to MSMEs (micro, small and medium enterprises) to an external benchmark, effective October 1."
RBI makes mandatory for banks to link all new floating rate personal or retail loans & floating rate loans to MSMEs to an external benchmark effective October 1 https://t.co/U0oYdxrgA6
— CNBC-TV18 (@CNBCTV18Live) September 4, 2019
SBI will charge a spread of 265 bps (bps) above RBI's repo rate, which currently stands at 5.4 percent. This will bring its external benchmark-based lending rate to 8.05 percent.
For salaried class borrowers, the effective home loan rate will change. SBI will charge a premium of 15 bps on loans up to Rs 30 lakh, taking the effective home loan rate to 8.20 percent. The interest on loans between Rs 30 lakh to Rs 75 lakh will now stand at 8.45 percent after levying a premium of 40 bps.
For non-salaried borrowers, SBI said a premium of 15 bps will be added to the card rate. If the ratio of the loan to value of the asset purchased is between 80 and 90 percent, a premium of 10 bps will be added to the card rate for loans up to Rs 30 lakh.
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