SBI savings deposit interest cut by 25 bps on all deposits, MCLR by 35 bps

New Delhi| India’s largest lender, SBI, on Tuesday slashed the marginal cost-based lending rate (MCLR) by 35 basis points across all tenors, a move that followed on the heels of RBI rate cut to tackle the economic fallout from the coronavirus pandemic.

It’s SBI’s 11th consecutive cut in MCLR in FY 2019-20. The one-year MCLR will be 7.40% per annum with effect from April 10, 2020.

Following the reduction in rates, SBI savings accounts with balances up to Rs 1 lakh will earn an interest rate of 2.75 per cent per annum, down from 3 per cent. For savings account balances above Rs 1 lakh, there will be a similar reduction of 0.25 per cent.

In the press note, SBI said that this is 11th consecutive cut in MCLR in the financial year 2019-20. The one-year MCLR will now come down to 7.40 per cent per annum from 7.75 per cent, with effect from April 10, 2020.

It may be noted that last month, SBI reduced fixed deposit interest rates following the RBI’s repo reduction of 75 basis points. It also reduced domestic retail Term Deposit (TD) interest rates by 20 basis points to 50 basis points across tenors and bulk TD interest rates reduced by 50 basis points to 100 basis points across tenors.

As for interest rates, the reduction is significant on the bank’s external benchmark rates (repo rate linked rates), which saw a reduction of 75 basis points at once. With this, the effective interest rate on home loans linked to external benchmark repo is down to 7.1 per cent, a historic low. Other banks too are expected to cut MCLR in the days to come.

Earlier on Monday, Canara Bank had cut its marginal cost of funds based lending rates (MCLR) on loans and advances across all tenors by up to 35 basis points across tenors, effective April 7.

On Friday, private lender ICICI Bank reduced interest rate on fixed deposits and savings account by up to 50 bps. The reduction in interest rates on savings accounts will be effective from April 9, while new rates on FDs became effective from April 3, 2020.

(Inputs from Agencies)