SBI drops after announcing lending rates based on marginal cost of funds

State Bank of India fell 1.65% to Rs 194.30 at 15:21 IST on BSE, after announcing lending rates based on marginal cost of funds with effect from 1 April 2016.

Meanwhile, the S&P BSE Sensex was down 9.51 points or 0.04% at 25,329.07

On BSE, so far 24.23 lakh shares were traded in the counter as against average daily volume of 29.37 lakh shares in the past one quarter. The stock hit a high of Rs 198.75 and a low of Rs 192.70 so far during the day. The stock had hit a 52-week high of Rs 305 on 22 May 2015. The stock hit 52-week low of Rs 148.30 on 12 February 2016. The stock had outperformed the market over the past one month till 30 March 2016, rising 24.72% compared with 10.16% rise in the Sensex. The scrip, however, underperformed the market in past one quarter, sliding 12.51% as against Sensex's 2.39% decline.

The large-cap state-run bank has equity capital of Rs 776.28 crore. Face value per share is Re 1.

According to the announcement on the bank's website, State Bank of India (SBI)'s Marginal Cost of Funds based Lending Rate (MCLR) for overnight loans will be 8.95%, for one month will be 9.05% and for three months will be 9.10%. The MCLR on 6-month loans will be 9.15% and for one year loans the rate would be 9.2%, the bank said. MCLR for two year loans would be at 9.3% and loans with three year maturity would carry an MCLR of 9.35%, the bank said.

The Reserve Bank of India (RBI) after market hours on 29 March 2016, clarified some of the provisions relating to the MCLR system, which comes into effect from 1 April 2016. RBI clarified that fixed-rate loans of up to three years' tenor will be priced with reference to MCLR with effect from 1 April 2016. Fixed rate loans of tenor above three years will continue to be exempted from MCLR system. As regards the effective date for applying MCLR on floating rate loans, the RBI said that MCLR prevailing on the date of first disbursement, whether partial or full, will be applicable on the floating rate loan and future reset dates determined accordingly.

For computing the marginal cost of funds, commercial banks will have the option to reckon the outstanding balances of deposits and other borrowings as on any day, not more than seven calendar days, prior to the date from which the MCLR becomes effective. The chosen time lag shall be maintained consistently for a period not less one year.

The tenor of the funds in the single largest maturity bucket, provided it is more than 30% of the entire funds, will be reckoned for determining the MCLR. In cases where a bank does not have a single time bucket with more than 30% share of the funds reckoned for MCLR, the weighted average tenor of two or more maturity buckets that together account for more than 30% will be reckoned for determining the MCLR.

SBI's net profit fell 61.7% to Rs 1115.34 crore on 6.7% rise in total income to Rs 46731.01 crore in Q3 December 2015 over Q3 December 2014.

Government of India holds 60.18% stake in SBI (as per the shareholding pattern as on 31 December 2015).

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