The MCLR or marginal cost of funds based lending rate of the State Bank of India (SBI) is to see a steep reduction as soon as 10th of November. The State Bank of India or SBI as we all know is the country’s largest bank which deals with a huge capital each year. In other words, SBI which is the financial lung of the nation made this announcement on Wednesday morning.
According to recent reports, the SBI is said to reduce its interest rates by 10 basis points or bps, where 1 bp is equal to 0.01% of interest rate. With a thorough calculation, we can thus conclude that the MCLR of the bank would decrease by 0.1%, which is a great change in respect of lending rate. Even though SBI is the heart of Indian finance, its lending rates have been decreasing over the years, which make loans cheaper for the common man. Since the past three years, the MCLR has dropped from 8.35% to 8.25% for all tenors. This is the seventh time in three years that SBI has cut its MCLR.
The rates for fixed deposit or FD are also to see a steep decrease. This means the amount of interest issued after maturation would be lower than before. This would hugely affect the financial conditions of the nation as SBI is the largest money lender as well as interest provider in India. It serves to all tenors equally and it is hoped that this fetches good results in the Indian economy.