SBI alert! May 1 looming, these new rules set to come into effect; know how you can benefit

Country's largest banker State Bank of India (SBI) has changed some rules that will come into effect from May 1. If you also have an account with SBI, it is very important to know the change in the rules and how they may impact you. From May 1, SBI will link its loans and deposit rates to the repo rate. This will make loans from SBI cheaper. The SBI has become the first bank to implement it.

Lower interest rates for deposits above Rs 1 lakh

According to the new rules, after May 1, the SBI's Savings account holders will get less interest on deposits of more than one lakh rupees. In a notification, the SBI has said that from 1st May, 2019, the SBI account will get less interest of 0.25-0.75 per cent on the amount more than Rs 1 lakh. The interest rate for deposits up to Rs 1 lakh will be 3.50 per cent while for deposits above Rs 1 lakh, the interest rate will be 3.25 per cent.

Benefits of repo rate linkage

Banks decide their loan interest rate based on MCLR (Marginal Cost of fund base Lending Rate). However, many times banks don't pass repo rate cut benefits to consumers. However, if a bank links repo rate to loan interest rates like SBI, the EMIs will go down with a cut in the repo rate. The repo rate-loan interest rate linkage rule will apply to loans above Rs one lakh.

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SBI interest rate cut

Following the repo rate cut by the Reserve Bank of India, several banks including SBI slashed their interest rates. SBI has cut interest rates by 0.10 per cent on a home loan up to Rs 30 lakh. The current interest rates on home loans of less than Rs 30 lakh is between 8.60 to 8.90 per cent. Earlier this rate was 8.70 to 8.90 per cent.