SBI reduces interest rates for loans and deposits
Get ready to pocket some extra savings, folks! Following the Reserve Bank of India's (RBI) repo rate cut, India's biggest bank, State Bank of India (SBI), has slashed the rates for home, auto, and education loans. But hold up, because that cut in loan rates comes with a small catch - fixed deposits will return less due to SBI reducing deposit rates.
Basically, SBI's Repo Linked Lending Rate (RLLR) dropped to 8.25%, and the External Benchmark Based Lending Rate (EBLR) fell to 8.65%. These new rates will kick in from April 15, 2025.
Nationalized banks like Bank of Baroda, Punjab National Bank, UCO Bank, Bank of India, and Indian Bank have also followed suit, cutting their repo-linked lending rates by 25 basis points.
However, many banks have held off on cutting their Marginal Cost of Funds Based Lending Rate (MCLR), which are primarily offered to companies. Which means if you're a business borrower, things may not be as rosy just yet.
But if you're planning to take out a new loan, consider yourself in luck! New borrowers can now snag loans at lower rates. But don't start popping champagne just yet - the exact date for existing borrowers to benefit from the rate cut depends on their interest rate reset dates, as set by their lenders.
According to the RBI's mandate issued in 2019, banks must link retail loans like home loans and car loans to external benchmark lending rates (EBLR) – which is mostly the repo rate of the RBI (RLLR). Banks have the freedom to offer a spread based on the borrower's profile, though.
SBI's not just cutting loan rates, they're also trimming deposit rates. Effective April 15, fixed deposit interest rates have taken a dip. For example, the interest rate on one- and two-year term deposits will now be 6.70%, and deposits with maturities between two and three years will fetch just 6.90%. Deposits above Rs 3 crore will get a more significant cut of 20-25 basis points.
SBI's also introduced a new special tenure scheme called 'Amrit Vrishti', which offers a lower rate of 7.05% for general customers, 7.55% for senior citizens, and 7.65% for super senior citizens. The Bank of India, on the other hand, has withdrawn its 400-day special deposit scheme and reduced interest rates on fixed deposits.
But it's not all doom and gloom for savings account holders - India's leading private lender, HDFC Bank, has lowered the interest rate on savings accounts by 25 basis points to 2.75%, making it the lowest among peers in the private sector. For balances above Rs 50 lakh, the rate now stands at 3.25%, as against 3.5% earlier. The new rate will come into effect from April 12.
Game on! 🚀💸 Now's the time to consider your options and make informed decisions about your finances! 💰🤑
Personal-finance decisions may need reevaluation due to the lowered loan rates offered by banks like SBI on home, auto, and education loans. The decrease in fixed deposit interest rates, as seen in SBI's case, is a factor to consider in your personal-finance business-related decisions effective from April 15, 2025.
