India’s biggest lender State Bank of India or SBI today announced a cut in MCLR rate or marginal cost of funds-based lending rate by 10 bps across all tenors, effective from December 10th. With this cut, home, car and other retail loans of SBI linked to MCLR will get cheaper. After the latest cut, SBI's one-year MCLR comes down to 7.90% per annum from 8.00% per annum. This is the eighth consecutive cut in MCLR by SBI this fiscal.
SBI said it continues to remain the “cheapest loan provider in the country" and the latest rate cut is meant to "pass on the benefit of its reducing cost of funds to the customers."
SBI says it commands 25% market share each in home loans and auto loans.
MCLR rates are based on the bank's own cost of funds. If your home loan is linked to SBI's MCLR rate, the latest cut may not bring down your EMIs immediately. MCLR-based loans typically have a one-year reset clause.
For new borrowers, SBI also offers a repo-rate linked home loan scheme. Under this scheme, the loan rate gets adjusted as and when Reserve Bank revises its benchmark repo rate.
Earlier this month, the RBI held its repo rate steady at 5.15% but so far this year the central bank has cut the benchmark lending rate by a cumulative 135 basis points.
SBI is the largest commercial bank in terms of assets, deposits, branches, customers and employees. SBI also claims that it is also largest mortgage lender in the country.
As on September 30, 2019, SBI had a deposit base of over ₹30 lakh crore and advances of nearly Rs. 22.5 lakh crore.