SBI to cut MCLR by 10 basis points across all tenors from Oct 10

The one-year marginal cost of funds-based lending rate (MCLR) would come down to 8.05% from 8.15% from October 10

The country’s largest lender, State Bank of India (SBI), will cut its marginal cost of funds-based lending rate (MCLR) by 10 basis points (bps) across tenors from Thursday. 

Short-term retail and bulk deposits for a year to less than two years will be 10 and 30 bps lower, respectively. Savings bank deposits up to Rs 1 lakh will be 25 bps less from November 1, at 3.25 per cent. The latter rate is now linked to changes in the Reserve Bank of India’s (RBI's) repo rate. The one-year MCLR would come down to 8.05 per cent on Thursday, from 8.15 per cent. This is the sixth such cut in a row this financial year, SBI said.

For pricing of retail (home) loans and those to small and medium enterprises, the bank has from October 1 started using an external benchmark (RBI’s repo). RBI reduced its repo rate (at which it lends to banks) by 25 bps to 5.15 per cent in October’s monetary policy review.

Bankers have maintained that demand for credit is low. They point to RBI data on credit offtake, that loan dues in the banking system fell 0.7 per cent by the middle of September, over a year. Year-on-year credit growth at that point was 10.3 per cent. SBI’s own credit growth was 12.47 per cent over the 12 months till end-June. Credit outstanding was Rs 22.38 trillion.

Last month, SBI had reduced its rates on retail deposits by 20-25 bps and on bulk term deposits by 10-20 bps, across tenors. Deposits of the banking system grew 1.2 per cent from the start of this financial year (April 1) till mid-September, and 10 per cent year-on-year, RBI data shows. SBI’s deposits grew 7.3 per cent to Rs 29.48 trillion in the 12 months till end-June.