SBI cuts MCLR by 15 bps in big relief for home loan takers; introduces special deposit for Senior Citizens

SBI or State Bank of India has reduced its MCLR (Marginal Cost of funds based Lending Rate) by 15 bps from 7.40 per cent to 7.25 per cent. This SBI move will provide relief to the existing home loan borrowers as well as new home loan applicants. The decision will become applicable from 10th May 2020. This is the 12th consecutive reduction in SBI MCLR. By this decision, MCLR linked home loan borrowers' EMI will get cheaper by near Rs 255 for a 30 year loan of Rs 25 lakh. The SBI informed about the decision in written press statement.

The SBI statement said that to safeguard the interests of Senior citizens in the current falling rate regime, it has introduced a new product ‘SBI Wecare Deposit’ for Senior Citizens in the Retail TD segment. Under this new product, an additional 30 bps premium will be payable for Senior Citizen’s Retail term deposits with “5 Years & above” tenor only. This scheme would be in effect up to September 30, 2020.

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Thus, the effective rate of interest for Retail TDs of Senior Citizens will be:

1] For Retail TD of ‘below 5 years’ tenor: 50 bps higher than the rate applicable for the general public (no change in premium); and

2]  For Retail TD of ‘5 years & above’ tenor (new product): 80 bps higher than the rate applicable for the general public (30 bps extra premium).

This additional premium will not be payable in case of premature withdrawal of such deposits.

On how much relief will be passed on to the MCLR linked home loan borrowers the SBI statement said, "Consequently, EMIs on eligible home loan accounts (linked to MCLR) will get cheaper by approx. Rs 255.00 for a 30 year loan of Rs 25 lakh.

The SBI is also going to cut interest rates on the retail term deposits for tenor of up to three years as its statement said, "In view of adequate liquidity in the system as well as with the Bank, SBI prunes its interest rates on Retail term deposits by 20 bps for ‘up to 3 Years’ tenor, effective from May 12, 2020."