The largest public-sector lender in India, SBI (State Bank of India), gave some good news to the potential home buyers and announced that it would extend its waiver of processing fees on home loans for next three months. The Bank also announced that it also has cut its base rate and benchmark prime lending rate (BPLR) by 30 basis points (bps). SBI noted that approximately 80 lakh customers will benefit from this move and the new rates are going to be effective from January 01, 2018.
SBI also announced a sharp reduction in lending rates for its old customers whose loans were linked to base rates. Country’s largest bank said on Monday that it has lowered the base rate – the floor rate below which the bank does not give loans to prime customers – by 30 basis points to 8.65%.
With this reduction, SBI’s base rate is lowest among country’s top lenders. This reduction in rates is a major relief to many SBI customers. Almost half of SBI long-term retail borrowers, particularly students and the home loan borrowers have their lending rates linked to base rate. Another half of the retail borrowers shifted to MCLR system where the lending rates are revised at the end of every year and they are locked for a term of 1 year. Each bank has different rates for the different period. For SBI the rate ranges from 7.70% for overnight borrowing to 8.10 for three years.
Prior of the MCLR system, all banks pegged their loans to base rate- a single rate and the risk and tenor premium. Adding too it. SBI has now also extended an ongoing waiver on home loan processing fees till March 31, 2018, for new customers as well as customers who are looking to switch their existing loans to SBI.
The managing director of SBI, Mr. PK Gupta, said that the reduction in base rate is a new year gift to the bank’s loyal customers as a large number of consumers who have their loan linked to base rate will surely be benefitted by a decrease in rates. He further explained that this reduction is part of bank’s efforts to ensure transmission of reduction in the policy rates in the recent past. According to him, approximately 80 lakh customers will be benefitted by this move.
State Bank of India (SBI) ranked 217th on the Fortune Global 500 list of the world’s biggest corporations as of July 2017 and is the largest commercial bank in India. It has a sizeable overseas presence with 198 offices in 35 countries across the world. State Bank of India has a significant presence across the broad spectrum of the financial sector in India with subsidiaries/joint ventures in the areas like general insurance, life insurance, investment banking, mutual funds, custodial services, broking and depository services, credit cards, pension fund management, pension fund management, factoring services etc.
On April 1, 2017, SBI merged five of its associate banks – State Bank of Bikaner & Jaipur, State Bank of Mysore, State Bank of State Bank of Hyderabad, Patiala and Bharatiya Mahila Bank and State Bank of Travancore with itself.
