Are you an SBI (State Bank of India) customer? Well then you might be in for some good news from the 1st of May 2019. If it’s an explosion of discounts on home loan interest rates (if you’ve been servicing home loan EMIs) or FD and savings bank interest rates climbing up to sky-high levels that you’re expecting, then prepare to be disappointed! However, leaving aside such improbable dreams (that sadly most of us have!), SBI does have some genuinely good developments or changes if you may call it so, on the anvil for homebuyers and short-term loan seekers.
Interest rates to be tied to repo rates
The Reserve Bank of India (RBI) has already slashed the repo rate two consecutive times in the recent past. Now, the State Bank of India (SBI) has confirmed that it’s pricing for short-term loans and also for savings account deposits will be tied to the RBI’s repo rate. This will be effective from the 1st of May, 2019. The interest rates on loans are usually worked out by Indian banks on the basis of the MCLR or Marginal Cost of Funds Based Lending Rate. Additionally, many financial institutions do not transmit the repo rate changes swiftly to their customers as well.
SBI (State Bank of India) is the only Indian bank till now to link its interest rate on loans to the RBI repo rate. This could lead to loan EMIs coming down by a decent margin as per experts.
Lower home loan interest rates
In a major bonanza for home loan borrowers, interest rates have already been lowered by SBI (State Bank of India) by 10 basis points. This equates to a reduction of 0.10% on home loan amounts up to Rs. 30 lakhs. The rate of interest on home loans up to Rs. 30 lakhs now stands at 8.60-8.90% at State Bank of India. The benchmark MCLR (Marginal Cost of Funds Based Lending Rate) has also been lowered by SBI to the tune of 5 basis points or 0.05% for various tenors. This is now at 8.50% for a tenor of 1 year.
Clearly, homebuyers are going to benefit in case they apply at SBI and meet the eligibility criteria to boot. If you’re thinking of applying for a home loan, this could be a great time as per experts since home loan interest rates are on the lower side. The deductions may seem small but over time if you measure the overall impact over a sustained duration, it will come to a significant sum in interest costs.
Deposits over Rs. 1 lakh to earn lower interest
This could be a slight pet peeve for some customers as we see it! Holders of savings bank accounts at State Bank of India will now be earning lower interest on deposits which are higher than Rs. 1 lakh. For amounts up to Rs. 1 lakh, SBI will be paying an interest rate of 3.50% annually while this comes down to 3.25% per annum for deposits which are over Rs. 1 lakh. This could be a slight hindrance for those with large balances in SBI (we envy these lucky individuals!) although the overall impact should be minor to say the least.
Other SBI updates
SBI (State Bank of India) has also pulled a rabbit out of its hat (we mean new innovation and nothing else!) by offering a lower rate of interest on EV car loans. Those taking loans for buying electric cars instead of their regular counterparts will now get a 20 basis point discount on the loan interest to be repaid. The repayment tenor will also be longer for buyers. These are major incentives for those considering EV (electric vehicle) purchases and should encourage higher sales volumes in line with the aim of the Indian Government to ensure 30% EVs out of the entire fleet on roads by the year 2030. The bank has opined that the special benefits on electric car loans will be a game changer in this regard.
As can be seen, customers at SBI should definitely prepare for these major changes that will be implemented from 1st May 2019. Homebuyers and short-term loan seekers should certainly benefit. SBI has definitely implemented some far-reaching changes that are expected to be emulated by other banking industry players as well in the near future.