SBI makes a smart move

SBI has linked its rate on saving bank deposits and its rates for cash credit and overdraft to the repo rate

Should banks be linking their lending rates to an external benchmark? The Reserve Bank of India (RBI) seems to be having second thoughts on the subject. That has not stopped State Bank of India (SBI) from making its first move in this respect.

SBI has linked its rate on saving bank deposits and its rates for cash credit (CC) and overdraft (OD) to the repo rate. In both cases, this will be applicable to accounts of over Rs 1 lakh. The saving bank deposit rate has been pegged at 2.75 percentage points below the repo rate (currently 6.25 per cent), that