SBI cuts benchmark lending rate by 15 basis points; Introduces 'SBI Wecare Deposit' for Senior Citizens

The country's largest lender, State Bank of India (SBI) on Thursday slashed its Marginal Cost of Funds based Lending Rate (MCLR) by 15 basis points (bps) across all tenors. With that, the marginal cost of funds based lending rate comes down to 7.25 per cent, from 7.40 per cent with effect from May 10, 2020. This is the twelfth consecutive reduction in bank's MCLR.

Consequently, EMIs (equated monthly instalments) on eligible home loan accounts (linked to MCLR) will get cheaper by about Rs 255 (per lakh) for a 30-year loan of Rs 25 lakh, SBI said in a statement.

One basis point is equal to one-hundredth of a percentage point.

The lender also introduced the Special Deposit Scheme for senior citizens with a higher interest rate. But, to safeguard the interests of senior citizens, the bank has introduced a new product 'SBI Wecare Deposit' in the retail term deposit (TDs) segment. Under this new product, an additional 30 basis points premium will be payable for senior citizen's retail term deposits with five years and above tenure only. This scheme would be open until September 30, 2020.

Thus, the effective rate of interest for Retail TDs of Senior Citizens will be:

For Retail TD of 'below 5 years' tenor: 50 bps higher than the rate applicable for the general public (no change in premium)

For Retail TD of '5 years & above' tenor (new product): 80 bps higher than the rate applicable for the general public (30 bps extra premium). This additional premium will not be payable in case of premature withdrawal of such deposits.

But, SBI slashed its interest rates on retail term deposits (below Rs 2 crore) by 20 basis points for up to 3 Years tenure, effective from May 12, 2020.