Mumbai: Country’s largest lender State Bank of India (SBI) will switch to Repo Rate as the external benchmark for all floating rate loans for MSME, housing and retail loans effective October 1, 2019, the bank has said.
The Repo-linked lending rate will be beneficial for customers in during rate reduction situations as they will immediately benefit from the rate cut announcements made by the Reserve Bank of India in its monetary policy. SBI will directly pass on the changes in the key interest rate by the central bank to the customers.
The latest move is as per RBI’s notification dated September 4, 2019. SBI voluntarily extends the external benchmark based lending to Medium Enterprises also, to boost lending to the MSME sector as a whole.
SBI had introduced floating rate home loans effective July 1, 2019. A few modifications have been made in the scheme effective 1st October 2019 to comply with the latest regulatory guidelines.
The RBI had earlier asked banks to link all new floating rate personal or retail loans (home, auto) and floating rate loans to Micro and Small Enterprises to external benchmarks from October 1.