[sbinews] SBI reduces benchmark lending rate to 10.25%, lowest in industry -Economic Times

  • From: "Rajendra S. Pai" <rajendra.pai@xxxxxxxxx>
  • To: <sbinews@xxxxxxxxxxxxx>
  • Date: Wed, 31 Dec 2003 11:33:38 +0530

SBI reduces benchmark lending rate to 10.25%, lowest in industry

MUMBAI: State Bank of India has fixed its single benchmark prime lending rate 
at 10.25%, the lowest in the industry and down from its PLR of 10.50%. The 
country's largest bank has also cut interest rates on deposits by 0.25%, to 
5.25% for three years and above, and to 5% for one year to less than three 
The reduction in lending rates rate will translate into a 0.25% cut in home 
loan rates for existing and new borrowers. The new home loan rates will be 7.5% 
against 7.75% for five years, 8% (8.25%) for up to 10 years and 8.25% (8.5%) 
for loans of over 10 years. The new rates will be effective from January 1. 
Interest rate on deposits with maturities of two to less than three years has 
been fixed at 5%, while the rate for deposits of three years and above stands 
at 5.25% with effect from January 1. Rates on its short-term deposits remain 
All SBI lending rates will now be linked to the new single BPLR. 
Earlier, SBI had three rate slabs - State Bank Medium-Term Lending Rate 
(SBMTLR) at 11%, State Bank Advance Rate at 10.5%, and State Bank Short Term 
Advance Rate at 10%. SBI's home loan rates were linked to SBMTLR which was 11%. 
But despite the SBMTLR falling by 0.75%, the home loan rates will fall by only 
0.25%. This is primarily because RBI guidelines on single BPLR state that a 
bank can load 50 basis points as term factor while deciding the prime rate on a 
loan product. 
SBI has said that loans that are presently linked to PLR, SBMTLR and SBSTAR 
shall accordingly stand reduced by 0.25%. SBI has said that the reduction is in 
response to RBI's suggestion that BPLR should be determined by taking into 
account the actual cost of funds, operating expenses and a minimum margin to 
cover regulatory requirement of provisioning or capital charge and profit 
The SBI rates on short-term deposits are unchanged at 4% for 15 to 45 days, 
4.5% for 46 to 179 days and 4.75% for 180 days to less than a year. 
ICICI Bank, the second largest bank after SBI, has not yet announced its single 
BPLR. ICICI Bank charges 10.5% for loans up to 1 year, 11.5% for loans of one 
to three years and 12.5% for loans above three years. Bank of Baroda has 
announced a single BPLR of 10.5%, while Union Bank of India, Canara Bank and 
Punjab National Bank have pegged it at 10.75% with effect from January 1. 

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