Days ahead of the Loksabha elections of 2019, the RBI announced a reduction in rates for all the banks in India. This clearly meant that the citizens belonging to the middle class of India will be able to enjoy lower rates of interest on loans and EMIs.
The State Bank of India, probably for the first time ever, has altered the rates of savings deposits rates and short-term loans as per the rates declared by the RBI.
The changes by SBI will definitely prove to be a relief in the scorching heat of May!
RBI Announced Reduced Repo Rate
After the Reserve Bank of India announced the new and reduced repo rates for the financial year of 2019. The repo rate, for those who are unaware, is nothing but the rate of interest charged by the RBI from commercial banks at the time of lending money for a short term.
As announced by the RBI, the repo rate has been reduced by 0.25%, which is 25 basis points. This means that the new repo rate is now 6%. The reverse repo rate has also been slashed, which is now 5.75% from 6%.
This repo rate, or repurchase rate, will be beneficial to us citizens only if the commercial banks decide to lower their rate of interest as well, and SBI is the first bank to do so.
SBI’s Reduced Rates on Deposits and Home Loans
The State Bank of India decided to link its own rates of loans and deposits to that of the RBI. This means that the loans provided by SBI will now be cheaper. The SBI’s reduced repo rates will be official starting from May 1, 2019.
The SBI, in a statement, said that they have turned to this decision of linking their rates to that of RBI’s so as to, “address the concern of rigidities in the balance sheet structure and address the issue of quick transmission of changes in the RBI policy rates, effective May 1, 2019.”
Here are the reduced rates – as per SBI, the interest rate for any deposit up to Rs. 1 lakh will be Rs. 3.5 percent and the rate of interest for any deposit more than Rs. 1 lakh is 3.25 percent. SBI has also reduced the rate of interest on home loans of up to Rs. 30 lakhs by 0.10 percent. What was earlier 8.70 to 8.90 percent, will now be between 8.60 to 8.90 percent.
Reduced rate of interests are absolutely delightful, and we hope the other banks follow suit too and soon!
Comments are closed, but trackbacks and pingbacks are open.