Good news for borrowers: SBI reduces one-year MCLR by 10 bps to 7.9%

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Published: December 10, 2019 3:46:35 AM

According to the bank’s website, the MCLR for all other tenors – overnight, one month, three months, six months, two years and three years – stood unchanged at 7.65%, 7.65%, 7.7%, 7.85%, 8.1% and 8.2%, respectively.

SBI, MCLR, NIM, SBI loan, HDFC Bank, WALR, Nomura, corporate loan book, falling deposit ratesAs of Q2FY20, SBI’s loan yields came in at 8.69%, higher than 8.56% in the June quarter and 8.43% in the year-ago period.

State Bank of India (SBI) on Monday reduced its one-year marginal cost of funds-based lending rate (MCLR) by 10 basis points (bps) to 7.9%. Since the beginning of 2019, while the one-year MCLR has declined by 65 bps, while the term deposit rate for the ‘1 year to less than 2 years’ tenor has fallen by 55 basis points during the period.

As of Q2FY20, SBI’s loan yields came in at 8.69%, higher than 8.56% in the June quarter and 8.43% in the year-ago period. The net interest margin (NIM) of the bank had risen 21 bps sequentially to 3.22%. Brokerage firm Nomura, in a report, had said that the management expected to sustain the current NIM.

According to the bank’s website, the MCLR for all other tenors – overnight, one month, three months, six months, two years and three years – stood unchanged at 7.65%, 7.65%, 7.7%, 7.85%, 8.1% and 8.2%, respectively. Prior to the series of rate cuts, the one-year MCLR stood at 8.55% as on January 10, while the term deposit rate for the ‘1 year to less than 2 years’ tenor stood at 6.8% at the time. MCLR is the minimum rate at which a bank can lend.

While borrowers gained, depositors including senior citizens were affected due to the falling deposit rates. Currently, the retail term deposits for the ‘1 year to less than 2 years’ tenor stood at 6.25% effective November 10, while for senior citizens, the rate stood at 6.75%.

Meanwhile, the one-year MCLR of Bank of Baroda and HDFC Bank both stood at 8.3%. The central bank, in its December monetary policy note, said that the credit market transmission remains delayed but has been picking up. The one-year median MCLR has declined by 49 bps during February-October, while the weighted average lending rate (WALR) on fresh rupee loans sanctioned by banks declined by 44 bps. The WALR on outstanding rupee loans increased by 2 bps during this period, it said. The median-term deposit rate has declined by 47 bps during February-November 2019, while the weighted average term deposit rate declined by 9 bps in October against a decline of just 7 bps in eight months during February-September, the central bank had said. At the end of Q2FY20, domestic advances of the bank grew 8.43% year-on-year. The corporate loan book witnessed a y-o-y growth of 2.78%.

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