After linking its short-term loans and large savings deposits rates to the repo rate, the largest lender State Bank on Friday said it will introduce repo-linked home loans from July.
The lender has also reduced interest rate on cash credit account (CC) and overdraft (OD) customers with limits above Rs 1 lakh, after the RBI reduced the repo rate by 25 basis points on Thursday.
“We will introduce repo-linked home loans from July 1,” SBI said in a late evening statement.
The monetary policy committee had unanimously decided to reduced repo rate by 25 basis points to 5.75 percent in the second bi-monthly policy Thursday, taking it down to a nine- year low, citing sagging growth and to cushion the rising headwinds to the economy.
It was the third consecutive repo rate cut by RBI, with cumulative reduction of 75 basis points in 2019, so far.
“The benefit of reduction in the repo rate by 25 bps has been passed in its entirety to our CC/OD customers (limits above Rs 1 lakh), with effect from July 1,” SBI said.
The effective repo-linked lending rate (RLLR) for CC/ OD customers is 8 percent now, it said, while for savings deposits above Rs 1 lakh the new rate would be 3 percent.
In March, the bank had linked all CC accounts and ODs with limits above Rs 1 lakh to the repo rate plus a spread of 2.25 percent. For above Rs 1 lakh, it had set its savings deposit rates to 2.75 percent below the repo rate.