SBI cuts home loan rate by 5 bps; other PSBs may follow

State Bank of India (SBI), the country's largest public sector lender, has decided to slash the home loan rate by 5 basis points, in wake of the Reserve Bank's rate cut on Thursday.

Sources within the bank told DH that, in the bank meeting that took place on Friday, it was decided that the bank is going to slash the interest rates on the home loans up to Rs 30 lakh from existing 8.75% to 8.7%.

“As the nation’s largest lender, we have always kept customer interests at the centre. SBI has the highest market share of the home loans market and it is only appropriate that we empower the large lower and middle-class segment by transmitting the rate cut announced by the RBI,” said bank chairman Rajnish Kumar.

The SBI held a meeting over the issue of rate cuts late Friday evening.

Earlier, within hours of the RBI move, state-run Bank of Maharashtra had announced a 0.05% cut in its Marginal Cost of funds based Lending Rate (MCLR). The bank was recently removed from the Prompt Corrective Action (PCA) by the RBI.

Sources within the banking industry suggest that most public sector banks will soon follow suit. However, private banks are unlikely to pass on the benefits until April.

"We have the earnings season ahead. We will wait for the next rate cut till April to pass on the benefit because our deposit rates are very low," said a high ranking official from one of the private banks.