New Delhi: The country’s largest lender, State Bank of India (SBI) has said that it will introduce repo-linked home loans from July. The announcement comes after the state-owned linked its short-term loans and large savings deposits rates to the repo rate. After the RBI reduced the repo rate by 25 basis points on Thursday, the PSU bank reduced the interest rate on cash credit account (CC) and overdraft (OD) customers with limits above Rs 1 lakh.
“We will introduce repo-linked home loans from July 1,” SBI said in a late evening press release.
Rate cuts benefits will now be passed to customers
“The benefit of reduction in the repo rate by 25 bps has been passed in its entirety to our CC/OD customers (limits above Rs 1 lakh), with effect from July 1,” the public sector bank said.
SBI also said that the effective repo-linked lending rate (RLLR) for CC/ OD customers is 8 percent now, while for savings deposits above Rs 1 lakh, the new rate would be 3 percent.
In March, SBI had linked all CC accounts and ODs with limits above Rs 1 lakh to the repo rate plus a spread of 2.25 percent. For above Rs 1 lakh, the bank had set its savings deposit rates to 2.75 percent below the repo rate.
The RBI decision
The news comes just days after the monetary policy committee of the RBI unanimously decided to reduced repo rate by 25 basis points to 5.75 percent in the second bi-monthly policy Thursday, bringing the repo rate to a nine-year low.
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It was the third consecutive repo rate cut by RBI, with cumulative reduction of 75 basis points in 2019 so far.