Mumbai: Largest public sector bank in the country, State Bank of India (SBI) has reduced interest rates on several new retail and business loans linked to external benchmarks. The decision was taken as the Reserve Bank of India (RBI) cut its benchmark repo rate.
The State Bank of India (SBI) slashed its External Benchmark-based Lending Rate (EBLR) and Repo Linked Lending Rate (RLLR) on various loans. The decision will directly benefit SBI customers who have taken loans linked to EBLR and RLLR. The EMIs (Equated Monthly Installment) will become lower on these loans.SBI, however, kept the marginal cost-based lending rates (MCLR), Base rate, and Benchmark Prime Lending Rate (BPLR) unchanged.
Banks use the External Benchmark Lending Rate or EBLR to fix interest rates for various loans including home loans.
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The reduction in EBLR by 25 bps from 9.15 per cent to 8.90 per cent will make home loans cheaper for customers. SBI opted for repo rate as the external benchmark to link its floating rate home loans from October 01, 2019.
Moreover, SBI also cut RLLR by 25 bps from 8.75 per cent to 8.50 per cent. A decrease in RLLR translates to lower borrower costs for customers with loans linked to RLLR, such as home loans and business loans.
Interest rates on floating-rate loans associated with EBLR or RLLR will drop, resulting in shorter repayment terms or cheaper EMIs.
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