MUMBAI: The State Bank of India has cut its lending rates by 50 basis points and reduced deposit rates under its special scheme by 25 basis points, joining other banks over a week after the RBI’s unexpected repo rate reduction.
The rate cut, effective June 15, applies to both existing repo-linked loans and new borrowers. The move aligns SBI with peers who responded more swiftly to the RBI’s unconventional 50 bps repo rate cut announced last week.
Most of the peers of SBI, such as the second largest state-run lender Bank of Baroda, the third largest Punjab National Bank, Bank of India, Indian Bank, Union Bank, and UCO Bank among others had already slashed the loan rates for existing borrowers and for new borrowers as they are protecting their margins. Because for those loans linked to the repo rate, or known as the external benchmark-linked loans, and are on floating rates, the repo reduction has to be passed on to existing borrowers if not on the day of the repo rate cut by the Reserve Bank, latest by the first day of the next month.
This leaves only the two largest private sector lenders, HDFC Bank and ICICI Bank, yet to lower their rates. All the new rates will be effective from June 15, SBI said.
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