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SBI cuts MCLR and fixed deposit rates across all tenors

Due to this rate cut, the one-year MCLR would come down to 8.15 percent a year from 8.25 percent. This is SBI's fifth consecutive cut in MCLR in FY 2019-20.

ET Online|
Updated: Sep 09, 2019, 02.22 PM IST
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SBI cuts MCLR by 10 bps effective from sept 10
SBI cuts MCLR by 10 bps effective from sept 10
The country's largest lender, State Bank of India (SBI) announced early Monday morning that has reduced MCLR (marginal cost of lending rate) on loans across all tenors. In a press release, the public sector lender stated that it will reduce interest rates by 10 basis points (bps) across all tenors with effect from tomorrow, i.e., September 10. (1 basis point = 0.01%). Due to this rate cut, the one-year MCLR would come down to 8.15 percent a year from 8.25 percent. This is SBI's fifth consecutive cut in MCLR in FY 2019-20.

SBI MCLR rates w.e.f September 10
Tenor Existing MCLR (In %) Revised MCLR (In %)
Over night 7.9 7.8
One Month 7.9 7.8
Three Month 7.95 7.85
Six Month 8.1 8
One Year 8.25 8.15
Two Years 8.35 8.25
Three Years 8.45 8.35

Post the latest Reserve Bank of India (RBI) policy in August, this is the second rate cut by the bank. After the August monetary policy review the bank had announced a 15 bps across all tenors with effect from August 10.

It is not just SBI that has been cutting interest rates on loans, others too have been reducing rates. These include Central Bank of India, Axis Bank, Oriental Bank of Commerce, IDBI Bank and IDFC First Bank.

This calendar year, RBI has cut the repo rate by a total of 110 bps. However, banks have not cut interest rates with this rigor and this has been a grouse of most borrowers. To tackle this issue of interest rate cut transmission, the central bank has announced that all the loans sanctioned from October 1, 2019 will have to linked to an any of the four external benchmark.

On the flip-side however, SBI announced a further cut in fixed deposit interest rates. The bank has slashed the retail FD rates by 20-25 bps across all tenors. For bulk depositors, the FD rates have been cut by 10 to 20 bps across tenors. The new rates will be effective from September 10. This is the third time SBI has cut FD rates in the last two months.

SBI FD rates w.e.f September 10
Tenors Existing for Public w.e.f. 26.08.2019 (In %) Revised For Public w.e.f. 10.09.2019 (In %)
7 days to 45 days 4.50 4.50
46 days to 179 days 5.50 5.50
180 days to 210 days 6.00 5.80
211 days to less than 1 year 6.00 5.80
1 year to less than 2 year 6.70 6.50
2 years to less than 3 years 6.50 6.25
3 years to less than 5 years 6.25 6.25
5 years and up to 10 years 6.25 6.25

SBI FD rates for senior citizens w.e.f September 10
Tenors Existing for Senior Citizens w.e.f. 26.08.2019 Revised for Senior Citizens w.e.f. 10.09.2019
7 days to 45 days 5.00 5.00
46 days to 179 days 6.00 6.00
180 days to 210 days 6.50 6.30
211 days to less than 1 year 6.50 6.30
1 year to less than 2 year 7.20 7.00
2 years to less than 3 years 7.00 6.75
3 years to less than 5 years 6.75 6.75
5 years and up to 10 years 6.75 6.75

Previously, the bank has cut the FD rates twice in the month of August. With effect from August 26, SBI has slashed the FD rates by 10 to 50 bps lower across tenures for retail customers. With effect from September 10, 2019, the one year FD of SBI will be offered at 6.50 per cent.

Ever since RBI has been cutting key policy rates over the past year, banks along with cutting loan rates have also been reducing interest rates on FDs. This is bad news for those looking at FDs as a route for fixed income.

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