SBI reduces MCLR, introduces special fixed deposit for Senior Citizens – Check details

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Updated: May 07, 2020 4:03 PM

To safeguard the interests of Senior citizens in the current falling rate regime, SBI has introduced a new product ‘SBI Wecare Deposit’ for Senior Citizens.

 SBI, bank, MCLR, Senior Citizens, home loan accounts, term depositsSBI introduces ‘SBI Wecare Deposit’ for Senior Citizens in the retail time deposit segment.

Country’s largest lender State Bank of India (SBI) has announced the reduction in its MCLR by 15 bps across all tenors. The one-year MCLR comes down to 7.25 per cent per annum from 7.40 per cent per annum with effect from May 10, 2020. This is the twelfth consecutive reduction in bank’s MCLR.

Consequently, EMIs on eligible home loan accounts (linked to MCLR) will get cheaper by approx. Rs 255 for a 30-year loan of Rs. 25 lakh.

The immediate impact will be for those home loan borrowers who have their home loan linked to bank’s MCLR and the re-set date nearing. The home loan EMI for them will come down or the loan tenure will be reduced.

Since October 1, 2019 the home loans are linked to an external benchmark. Most banks including SBI has loans linked to RBI’s repo rate or the Repo linked lending rate (RLLR). There is no direct impact on those borrowers when MCLR changes.

Watch: What is Repo Linked Lending Rate, Home Loan? RLLR meaning, comparison vs MCLR

In view of adequate liquidity in the system as well as with the Bank, SBI prunes its interest rates on retail fixed deposits by 20 bps for ‘up to 3 Years’ tenor, effective from May 12, 2020.

To safeguard the interests of Senior citizens in the current falling rate regime, the Bank introduces a new product ‘SBI Wecare Deposit’ for Senior Citizens in the Retail fixed deposit segment. Under this new product, an additional 30 bps premium will be payable for Senior Citizen’s Retail term deposits on “5 Years & above” tenor only. This scheme would be in effect up to September 30, 2020.

Thus, the effective rate of interest for Retail TDs of Senior Citizens will be:

  • For Retail TD of ‘below 5 years’ tenor: 50 bps higher than the rate applicable for the general public (no change in premium)
  • For Retail TD of ‘5 years & above’ tenor (new product): 80 bps higher than the rate applicable for the general public (30 bps extra premium). This additional premium will not be payable in case of premature withdrawal of such deposits.

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