Several PSU lenders, including Canara Bank, Bank of India and Bank of Baroda, Syndicate Bank, have already slashed their benchmark prime lending rates by 0.75 per cent after Finance Minister P Chidambaram met state-owned banks' heads to discuss the possibility of rate cuts.
A day after the Reserve Bank of India announced a cut in bank rate, State Bank of India has reduced its prime lending rates and interest on domestic term deposits by 0.25 per cent across all maturities with effect from May 5.
Speaking at a function at Ghaziabad on Monday, State Bank Chairman-cum-Managing Director O P Bhatt said the bank has decided to raise the interest rate by 0.5 per cent on all loans such as home loans and auto loans which are linked to PLR. The revision in PLR came after SBI raised its PLR from 12.25 per cent to 12.75 per cent last week following Reserve Bank's increasing its key short-term lending rate to banks.
Close on the heels of a cut in the interest rate on long term domestic deposits, State Bank of India is now contemplating a downward revision in its prime lending rates.
On the extent of cut in lending rates, the SBI chief said 'it is difficult to say at this point of time' but indicated that it would not be less than 25 basis points. SBI earlier reduced the benchmark PLR by 75 basis points to 12.25 per cent with effect from January 1. Bhatt is in the capital to attend a meeting of state-owned bankers called by external affairs minister Pranab Mukherjee, who is also holding the finance portfolio.
Public sector lenders led by State Bank of India said on Monday that they will look at further interest rate cuts.SBI chairman O P Bhatt told reporters after a meeting with Finance Minister Pranab Mukherjee that the bank is considering cutting its prime lending rate for the second time in as many months.
"We are still examining the market condition and will take a view on home loan rates in another week or 10 days," SBI Chairman O P Bhatt told reporters. SBI had increased its PLR by 50 basis points to 12.75 per cent last week. Following the hike in lending rates, the bank also increased deposits rates for various maturities.
The bank will give 3.25 per cent interest on savings bank deposits with a balance exceeding Rs 100,000. At present, the interest rate is 3.5 per cent.
Country's largest lender State Bank of India on Monday slashed prime lending rate by 0.25 per cent to 12.50 per cent, a decision that will make housing and car loans cheaper.
The State Bank of India on Saturday hiked its benchmark prime lending rate by 0.50 per cent from 12.25 per cent to 12.75 per cent.
State Bank of India has fixed its benchmark prime lending rate at 10.25 per cent, 0.25 per cent below the existing PLR, which is 10.5 per cent
Under the earlier scheme, borrowers were charged fixed interest rate of 8.5 per cent for Year 2 and Year 3 for loan amount less than Rs 50 lakh (Rs 5 million) and a rate of 9 per cent for first three years for loan amount of greater than Rs 50 lakh. Year 4 onward the interest rate was fixed at PLR minus 2.75 basis points.
Under the earlier scheme, borrowers were charged fixed interest rate of 8.5 per cent for Year 2 and Year 3 for loan amount less than Rs 50 lakh (Rs 5 million) and a rate of 9 per cent for first three years for loan amount of greater than Rs 50 lakh. Year 4 onward the interest rate was fixed at PLR minus 2.75 basis points.
Shifting to floating rate deposits can work as an anaesthetic gel for some customers, points out Tamal Bandyopadhyay.
Currently, banks follow system of internal benchmarks, including Prime Lending Rate, Benchmark Prime Lending Rate, Base rate and Marginal Cost of Funds based Lending Rate.
If you have availed a home loan from an NBFC, you can shift your existing home loan to a bank and benefit from the MCLR regime, suggests Ratan Choudhary, head - home loans, Paisabazaar.com.
Senior bankers are trying to impress upon the central bank that the shift to external benchmark-linked lending be postponed to April 1, 2020.
The big beneficiaries of this move will be the big three -- Bharti, Vodafone and Idea.
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