SBI gives New Year gift to home, car buyers! Cuts external benchmark rate on loans by 25 bps

State Bank of India (SBI) on Monday announced a reduction in its external benchmark based rate (EBR) by 25 basis points to 7.80 per cent from 8.05 per cent. The new rates will be applicable from January 1, 2020.

"With this reduction, interest rate for existing home loan customers as well as MSME (micro, small and medium enterprises) borrowers who have availed loans linked to external benchmark based rate would come down by 25 bps," the country's largest lender said in a release.

SBI also said that new home buyers would now be able to get loans at an interest rate of 7.90 per cent per annum as compared to the earlier 8.15 per cent.

Banks are required to alter the external benchmark based rate at least once in three months depending on underlying external rate like repo rate.

SBI's external benchmark lending rate is linked to RBI's repo rate which is currently at 5.15 per cent. The rate is fixed at repo rate plus 265 basis points. In October the RBI had cut its repo rate by 25 bais points to the current 5.15 per cent.

Earlier this month, the State Bank of India had announced a cut in marginal cost of funds-based lending rate (MCLR) by 10 bps for its 1 year MCLR. The revised rates came into effect from December 10. That was the eighth consecutive cut in MCLR this fiscal.

SBI is the largest commercial bank in India. It also has a market share of 25 per cent each in home loans and auto loans, it stated.

Also read: SBI reduces 1 year MCLR by 10 bps; to be effective from Dec 10

Also read: Why loans aren't getting cheaper despite RBI's multiple repo rate cuts