The country’s largest lender, State Bank of India has announced to cut one-year MCLR rate or marginal cost of funds-based lending rate by 10 bps. The new rates will be effective from December 10. All the other rates remain the same. State Bank of India has made this announcement just a few days after the Reserve Bank of India decided to maintain status quo on key rates.
The home loan, car loan and other retail loans of SBI linked to MCLR will get cheaper with this cut. This is the eighth consecutive cut in MCLR by SBI this fiscal. After the latest cut, SBI’s one-year MCLR comes down to 7.90% per annum from 8.00% per annum.
SBI is the largest commercial bank in terms of assets, deposits, branches, customers and employees. SBI also claims that it is also the largest mortgage lender in the country. State Bank of India claims to have 25% market share each in home loans and auto loans. The bank said that it will continue 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.”
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.