Mumbai: A day after Reserve Bank of India (RBI) governor Shaktikanta Das said he expects faster transmission of the three successive repo rate cuts, State Bank lowered its lending rates by 5 basis points across all tenors.
The new rates, effective from Wednesday, is the third reduction by SBI in this financial year having cut the rates by 5 bps each in April and May, while it’s home loan rates has come down by 20 bps during this period.
The one-year marginal cost of funds-based lending rate (MCLR) or minimum lending rate, to which all loans are linked, has been cut to 8.40 percent from 8.45 percent, the nation’s largest lender said in a statement on Tuesday. From 1 July, the bank had also introduced repo-linked home loan products.
Talking to reporters after the customary post-budget meeting with the finance minister on Monday, Das had said after delivering three back-to-back rate cuts to the tune of 75 bps, RBI expects a quicker transmission by banks.
“At the June MPC meeting, I had said by that time 50 basis points of repo rate cut had already been announced, only 21 bps had been transmitted. But one positive thing that is happening now is, earlier it used to take six months for transmission, now it is taking a much shorter period of two-three months,” Das had said. “Thereafter, we announced 25 bps cut more. So, it’s now a cumulative 75 bps cut. We are collecting the data and also you have to keep in mind that right from June, the system has more than adequate surplus liquidity,” he had said.
After the 25 bps repo rate cut in the June policy, Bank of Maharashtra, Corporation Bank, Oriental Bank and IDBI Bank had reduced their MCLR by 5-10 bps.
The next meeting of the monetary policy committee is scheduled for 5-9 August when majority of analysts expect another rate cut.
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