SBI follows RBI directive, changes loan scheme
Posted on: 01/Apr/2016 10:12:49 PM
The country`s largest bank State Bank of India (SBI) has said that there will be a new bench mark for loans. Interest rates will now be determined on the basis of the marginal cost of funds based lending rate or MCLR. This will reduce the auto loan and home loan rates by 10 basis points or bps. SBI has said that there will be seven bench mark rates of MCLR rates based on different tenures. The tenures include overnight, one-month, three-month, six-month, one-year, two-year and three-year.
Speaking about this, a senior SBI executive said, There will be a spread added to the one-year MCLR rate, which is 25 bps for home loan. So, the home loan rate will be 9.45 per cent. At present, SBI`s home loan rate is 9.55 per cent. Auto loans (are) also linked to the one-year benchmark. Most customers will benefit (in terms of lower interest rate) in this new framework. Some may not benefit since spreads may change.
Auto loans will now be given at 9.75 per cent. The current rate is 9.85 per cent.
SBI�s move comes in the wake of the Reserve Bank of India`s (RBI) directive to banks to move to the new loan system with effect from April 1. They believe that this will make transmission of monetary policy more effective. SBI is the first bank to announce the new framework.
