After linking its short-term loans and large savings deposits rates to the repo rate, the State Bank of India on Friday said it will introduce repo rate-linked home loans from July. SBI has also reduced interest rate on cash credit account and overdraft customers with limits above Rs 1 lakh, after the Reserve Bank of India reduced the repo rate by 25 basis points on Thursday.
"We will introduce repo rate-linked home loans from July 1," SBI said in a late evening statement.
RBI's monetary policy committee had on Thursday unanimously decided to reduce the repo rate by 25 basis points to 5.75 percent, a nine-year low, citing sagging growth and to cushion the rising headwinds to the Indian economy. It was the third consecutive RBI rate cut, with cumulative reduction of 75 basis points in 2019 so far.
"The benefit of reduction in the RBI repo rate by 25 bps has been passed in its entirety to our CC/OD customers (limits above Rs 1 lakh), with effect from July 1," SBI said.
The effective repo-linked lending rate for CC/OD customers is 8 percent now, SBI said, while for savings deposits above Rs 1 lakh the new rate would be 3 percent.
In March, SBI linked all CC accounts and ODs with limits above Rs 1 lakh to the repo rate plus a spread of 2.25 percent. For above Rs 1 lakh, it had set its savings deposit rates to 2.75 percent below the repo rate.
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