SBI cuts benchmark lending rate by 90 bps

The State Bank of India (SBI) after experiencing a surge in deposits on Sunday announced a rate cut in lending rates by 90 basis points for maturities ranging from overnight to three-year tenure.

The country's biggest lender by assets called for an overnight marginal cost of funds-based lending rate (MCLR) keeping the three-year loan rates at 8.15 percent from 9.05 percent previously.

The banks have received an estimated 14.9 trillion rupees (USD 219.30 billion) in old 500 and 1,000 rupees notes from depositors since the government unexpectedly banned the banknotes on November 8 last year in a bid to counter black money.

Although India's gross domestic product grew 7.3 percent in the July-September quarter from an year earlier, the fastest pace of growth among large economies, much of that has been led by consumer demand.

Lower lending rates will be welcomed by the Reserve Bank of India (RBI), which has cut the policy rate by 175 basis points since the start of 2015 but has felt banks were being too slow in cutting their lending rates.

The SBI's decision to reduce its benchmark lending rate by 0.9 percent will also trigger cuts across other banks.