When the Prime Minister of India, Mr. Narendra Modi had addressed the country on Saturday, the most important question raised was that all the banks will have to share their thoughts about the benefits of the banned notes especially in regards with the cut in the lending rates to the public. Moreover, Mr. Modi has also stated that it would be ideal for all the banks if they act for public interest.
Taking cue from Prime Minister’s address to the nation, the State Bank of India, has announced that they are going to slash the lending rates. As a matter of fact, SBI also happens to be one of the biggest lender as far as the assets are in question. Another aspect is that SBI has announced on Sunday that there would be cut in the lending rates by about 90 basis points. This shall be applicable for the maturities which would range from overnight to that of the 3 – year tenure.
Apart from this, SBI went on to state that there is an 8 % reduction on the marginal cost of the funds – based lending rate or the MCLR & which is applicable for 1 year tenure while earlier it was 8. 9 %. This news of reduction of the lending rates comes after a gap of 6 years & many people out there are terming it to be the cheapest bank loans available especially for the home loans.
Rate cut percentage
Due to this rate cut, one can notice that the home loan rate (floating) has now become 8. 60 % for the women borrowers whereas it is 8. 65 % for the other borrowers. These rates would be applicable for the loans which are up to Rs. 75 lakhs. On the other hand, if the loans are above Rs. 75 lakhs then the rate of interest for the women borrowers is 8. 65 % while for the rest of the people it is Rs. 8. 70 %.
As an end result, new borrowers would get the loans at the new rates while the people who had borrowed money earlier would be in a position to have the rates revised only when the 1 year lock – in term ends. In addition to this, the fixed home loans which are up to Rs. 30 lakh, for this the State Bank of India, shall be charging 8. 50 % for women borrowers whereas rate of interest for the others is 8. 55 %. Besides this, as per this scheme, interest rate for 1st two years remains unchanged while after that it is floating rate.
Cut in interest rates in other banks
Even the other banks are not far behind as Union Bank of India has cut MCLR by 90 basis points whereas Punjab National Bank has brought down 1 year MCLR by 70 basis point. Apart from this, Dena Bank has slashed the lending rate by another 0. 75 %. As of today, ICICI & Kotak Mahindra Bank have cut MCLR by 70 & 45 basis points respectively.
Such a step towards the cut in the bank rates is stated to be a welcoming move by the people. It is now to see as to how long this lending rates cut by banks for the home loans starting with the State Bank of India & other banks following suit will have its impact on the economic situation on not only India but also the Indians & the world in general.