India’s largest public sector bank State Bank of India (SBI) will have some new changes in its rules that will come in force from May 1st i.e from tomorrow and is all set to affect to the account holders. If you have an account in State Bank of India (SBI) then this is also for you.
According to reports, the SBI will enforce new rules from tomorrow and move to a new interest rate regime on the savings account deposits as well as short-term loans. In March, SBI has announced that it will link its interest rate on savings account with a balance above ₹1 lakh and short-term loans like overdraft and cash credit facility to RBI’s repo rate, effective 1 May 2019.
Indeed, SBI has become the first bank in the country to add its loan and deposit rate directly to the RBI repo rate. This new rule can provide customers with a cheap loan. Also, after May 1, the bank will give less interest rate on saving accounts as compared to that of earlier one.
In fact, on the basis of the Bank’s Marginal Coast of Fund Base Landing Rate (MCLR), the loan rate has been fixed. However, there were times when the bank did not provide relief in the MCLR despite the cut in the repo rate.
Earlier, with no relief in the MCLR, the common man could not get any benefit from the repo rate cuts. But now the new rule is going to benefit the customers directly.
What will be the Benefits?
State Bank of India is going to link the interest rate with repo rate from 1 May, i.e., whenever the RBI changes the repo rate, its impact will also be on the savings account holder. At the same time, from 1st May, SBI will have to pay 0.10 per cent interest on loans up to Rs 30 lakh. At present, the interest rate for loans up to Rs 30 lakh is between 8.60 and 8.90 per cent. SBI has reduced its MCLR by 0.05 per cent.
What will be the loss?
Loans will be found cheaply, but the interest rate on SBI's savings account will also decline. This is a big loss to the customers. According to the rules, on 1st May, deposits of one lakh rupees will get less interest than ever before, with the new rule, deposits up to Rs 1 lakh will now get 3.50% interest in the savings account. At the same time, the interest rate on deposits above 1 lakh rupees will be 3.25 per cent.