SBI lowers lending rate for 5th time in a row in FY20

SBI has lowered its lending and deposit over all tenures for the 5th time in a row in FY20. In the past one month, it was the second such reduction. SBI had also said that it has lowered lending rates by 10 basis points across all tenors. The one-year marginal cost of lending rate (MCLR) will stand reduced to 8.15% from 8.25% with effect from 10 September.

This was the fifth consecutive cut in MCLR in 2019-20. During the same period, RBI has the cut repo rate by 85 basis points. SBI also reduced its deposit rates by 20-25 basis points and bulk deposit rates by 10-20 basis points across tenures.

SBI said in a press release, “In view of the falling interest rate scenario and surplus liquidity, SBI also realigns its interest rate on term deposits w.e.f. September 10.” For FDs maturing in one year to less than two years, SBI has cut the rate by 20 basis points to 6.50% from 6.70%.

Punjab National Bank, Axis Bank, Canara Bank, HDFC Bank, Bank of Baroda, and Kotak Mahindra Bank have also revised their FD interest rates in select buckets.

The linking of retail floating loans to an external benchmark kicks in from 1 October, which will be applicable to new loans. SBI’s reduction of its MCLR rate is to keep retail interest sticky during the intervening period. Praveen Kumar Gupta, managing director, retail and digital banking, SBI, said, “Liquidity position has been comfortable for the bank. Depending on the banks’ requirement of funds, we have been reducing MCLR and also repo-linked rates. We are hoping that this will spur some demand during the festive season.”