SBI cuts benchmark lending rate by 15 bps

 Ahead of the RBI’s monetary policy this week, the country’s largest bank SBI has reduced its benchmark lending rate by 0.15 percentage point to 9.10%, a move that will lower EMIs for borrowers.

However, the bank made no changes in the marginal cost-based lending rate (MCLR). The benchmark one-year lending MCLR stands at 8%.

Base rate or the minimum lending rate of the bank has been reduced from 9.25% to 9.10% effective April 1, SBI said in a release.

The bank had last reduced its base rate by 0.05 percentage point to 9.25% in January this year when it reduced MCLR as well.

Banks have switched to MCLR as their new benchmark lending rate from June last year, replacing the base rate system for new borrowers.

It is calculated on the marginal cost of borrowing and return on net worth for banks. It was introduced by RBI to ensure fair interest rates to borrowers as well as banks. Majority of loans are still on base rate as MCLR was only introduced recently.

Similarly, Benchmark Prime Lending Rate (BPLR) has also been reduced by similar percentage points to 13.85% from 14%, the SBI website said.

Base rate to come down

With the reduction, EMIs for the new as well as existing borrowers who have taken housing and car loans at the base rate will come down by at least 0.15 percentage point.

The new rate is effective from the date the bank merged five of its associates and Bharatiya Mahila Bank putting it on the list of top 50 large banks of the world.

The total customer base of the bank has reached 37 crore with a branch network
of around 24,000 and nearly 59,000 ATMs across the
country.