SBI's new loan, deposit pricing system takes effect: 5 key points

State Bank of India's new rules are limited to savings bank deposits with balances of more than Rs 1 lakh and short-term rules

The State Bank of India will move to a new system of evaluating deposit and loan interest rates from May 1. The bank has decided to link its key pricing decisions on savings bank deposits and short-term loans to the repo rate.

The bank will become the first in India to adopt an external benchmark to set rates. At present, most banks finalise their loan interest rates on the basis of Marginal Cost of Fund Base Lending Rate (MCLR ).

The current effective rate on savings deposits is 3.50 per annum, 2.50 percentage points below the current repo rate of