In case of SBI, as the home loans are linked to one-year MCLR, the interest rates customers pay are locked in for 12 months. Older loans get the benefit of the revised rates after the one-year lock-in ends.
SBI in total has cut its benchmark lending rate by 200 basis points since January 2015.
Other public sector lenders Punjab National Bank (PNB) and Union Bank of India (UBI) too have brought down the benchmark interest rate by up to 0.9 per cent. PNB has cut its one-year MCLR rate by 0.7 per cent to 8.45 per cent from 9.15 per cent. Similarly, Union Bank of India has reduced its MCLR by 0.65-0.9 per cent. The revised one-year MCLR stands at 8.65 per cent.
Finance Minister Arun Jaitley claimed the note ban was a success and the results were showing now. He said demonetisation had increased the “lending capacity of the banks and naturally the cost of capital will come down”.
Welcoming rate reduction by banks, Economic Affairs Secretary Shaktikanta Das said in a tweet, “Trend of interest rate reduction follows demonetisation. Banks have substantial quantum of low cost funds now.”
“Welcome reduction of interest rates by SBI. Loan disbursements expected to pick up. Positive for the economy,” he added.
Last week, SBI’s subsidiary State Bank of Travancore had announced reduction in the lending rate, followed by another public lender IDBI which cut base interest rate by up to 0.6 per cent.
