Trim act

Mumbai, Dec. 20: The State Bank of India — the country’s largest commercial bank — gave its borrowers something to cheer about over the weekend by trimming its benchmark prime lending rate (BPLR) by 75 basis points to 12.25 per cent.

The bank seemed to have taken a cue from home loan giant HDFC, which had cut its benchmark rate by half a percentage point on Friday.

The SBI rate cut will directly benefit its existing floating rate home loan customers. New borrowers will also get the benefits of the reduced rate. The 75-basis-point cut should result in the equated monthly instalments (EMIs) of existing adjustable rate borrowers going down by at least Rs 50 per lakh per month.

The BPLR reduction means that the effective interest on an existing floating rate home loan should come down to 9 per cent for loans up to Rs 30 lakh and a tenure of five years. For loans above five years and up to 15 years, the revised interest rate is pegged at 9.25 per cent. The new rate will be 9.5 per cent for loans with a tenure of 15 to 25 years.

The rate revision will become effective from January 1. This is the second rate cut by the SBI in just over six weeks. On November 6, the public sector bank had trimmed its benchmark rate by the same margin.

The SBI also announced a reduction in its deposit rates across various tenures by 25 to 100 basis points which will be effective from January 1.

For deposits of 15 days to 45 days, rates have been revised to 4.25 per cent from 4.75 per cent. For deposits of 91-180 days, it now stands at 6.50 per cent (7 per cent), 181 days to less than a year at 7.25 per cent (8 per cent), 1 year to less than 2 years at 9.50 per cent (8.50 per cent), 2 years to less than 3 years at 8.75 per cent (9 per cent).

Interest rates on deposits of 1000-day maturity have also been cut to 9 per cent from 10 per cent earlier. Similarly, the interest rate on three-year to less than five-year deposits has now been fixed at 8.50 per cent from 9.25 per cent earlier.