SBI Cuts MCLR Rates: Here's How It Will Impact Your Home Loan

SBI slashes rates on retail term deposits by 20 basis points for tenors up to three years besides rolling out a special FD scheme for senior citizen.

New Delhi, May 8: In some relief to its customers with home loans, India’s largest lender SBI has announced a cut in the marginal cost of funds-based lending rate (MCLR) by 15 basis points across all tenors. It has reduced the one-year MCLR from 7.40 per cent per annum to 7.25 per cent. The rate cut will be effective from May 10. The bank has proposed the 12th consecutive cut in MCLR. This rate is typically based on the bank’s own cost of funds. According to SBI the cut will reduce the burden of equated monthly installment (EMIs) on home loan accounts linked to MCLR by ₹255 for a 30-year loan of ₹25 lakh. But the latest cut in MCLR may not reduce the burden of EMIs immediately, as MCLR-based loans typically have a one-year reset clause. The pubic bank has also reduced its interest rate on fixed deposits (FDs) saying it has adequate liquidity in the system and the bank. SBI cut its interest rates on retail term deposits by 20 basis points for tenors up to three years, which will be effective from May 12. This is the third cut in FD rates in two months. Meanwhile, the bank has introduced a new deposit scheme for senior citizens called SBI Wecare Deposit. “Under this new product, an additional 30 basis points premium will be payable for senior citizen’s retail term deposits for “5 years and above" tenor only. This scheme will be in effect till 30 September, the public sector lender added. Also Watch:  UN, WHO, IMF warn of starvation, depression due to COVID-19