On 27 March 2020, the Reserve Bank of India (RBI) reduced the repo rate by 75 basis points. As per this, the repo rate got reduced from 5.15% to 4.40%. These steps have been taken to extend surplus liquidity in the banking system in view of the coronavirus pandemic. 

State Bank of India becomes first among the banks to pass on the entire 75 basis points repo rate reduction to its borrowers. However, the benefit can be availed by the borrowers whose loans are linked to External Benchmark linked lending rate (EBR) as well as the Repo Linked Lending rate (RLLR).

Home loan interest card rate structure (floating)

Up to Rs 30 Lacs
EBR + 15 bps
ER: 7.20%
(ER: Effective Rate)
EBR + 40 bps
ER: 7.45%
Above Rs 30 Lacs to Rs 75 LacsEBR + 40 bps
ER: 7.45%
EBR + 65 bps
ER: 7.70%
Above Rs 75 LacsEBR + 50 bps
ER: 7.55%
EBR + 75bps
ER: 7.80%
Source: https://www.sbi.co.in/

All this has come into effect from April 1st. After the SBI’s latest revision, EBR gets reduced to 7.05% per annum from 7.80%, while RLLR falls to 6.65% from 7.40% per annum.

After this cut, the SBI home loan accounts (linked to EBR/RLLR) get cheaper. As the EMI gets reduced by around ₹52 per 1 lakh on a 30-year loan.

Perhaps, the SBI home loans linked to its marginal cost of funds-based lending rate (MCLR) rates can also get cheaper. The decision is yet to be taken, and as per the SBI announcement, the decision will be taken when SBI’s asset-liability committee meets this month. Last week, SBI had already sharply lowered its retail deposit or FD rates by 20 bps to 50 bps across tenors.

SBI on 1st April has also announced that the bank has extended the timeline for payment of the settlement amount by 3 months. 

Now, customers can pay their settlements under various settlement schemes such as SBI OTS 2019, Rin Samadhan 19-20, etc. by June 30, 2020. 

Well, all this is a piece of good news for the home loan borrowers but on the other hand, there is an inconvenience for the SBI FD investors, especially for senior citizens and others who are dependent on the interest income from their FDs. Despite RBI keeping key rates unchanged since December 2019, major banks have continued cutting interest rates on fixed deposits. State Bank of India (SBI), has reduced fixed deposit rates back-to-back in February and March.

And now, as a response to the coronavirus pandemic, SBI has also revised its interest rate structure on fixed deposits effective March 28, 2020. The new SBI FD interest rate on the retail time deposits stands reduced by 20 bps to 50 bps across tenors.