State Bank of India announced a cut of 25 basis points or 0.25% in the External Benchmark Rate (EBR). Older home, auto, MSME or other loans linked to EBR will now be cheaper and repaid at the rate of 7.80%.
Crux of the Matter
SBI’s external benchmark rate (EBR) is linked to RBI’s repo rate. The trickle-down economic effect of RBI’s repo rate cut of 25 basis points (bps) in October was passed by SBI as a new year present.
State Bank of India brought down the external benchmark rate (EBR) to 7.80% from 8.05%. It will take effect from January 1, 2020.
Older loans linked to the EBR will be now cheaper. New loans will be issued at a rate of 7.90% as compared to 8.15% before the rate cut.
SBI had announced a rate cut of 10 bps in the Marginal Cost of Funds-Based Lending Rate (MCLR).
Curiopedia
Loan Rates in India – Different banks in India adopt different ways to decide their lending rates. External Benchmark is a method that links interest rate to four benchmarks set by the RBI. Every bank following the external benchmark rate (EBR) needs to reset the interest rates at least one time every 3 months. The four benchmarks laid down by RBI are: 1. Repo-Rate 2. 3-Month Treasury Bill Yield 3. 6-Month Treasury Bill Yield 4. Any other benchmark rate published by Financial Benchmarks India Private Limited. More Info
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