Udayavni Special

In a First, SBI Links Pricing of Loans, Deposits to Reserve Bank’s Repo Rate

Team Udayavani, Mar 9, 2019, 2:55 AM IST

Mumbai: In a first-of-its-kind initiative, the nation’s largest lender State Bank on Friday announced linking of its savings deposits rates and short-term loans to an external benchmark — the repo rate of the Reserve Bank.

The new rates will be effective May 1, the bank said in a late evening statement.

The move will to a large extent speed up the monetary transmission process — which is banks passing on the rate cuts that the Reserve Bank announces to their borrowers-something that has been missing all these while and something that the monetary authority has been unhappy with.

“To address the concern of rigidities in the balance sheet structure and address the issue of quick transmission of changes in RBI’s policy rates, effective May 1, 2019, we have taken the lead in linking key pricing decision for savings bank deposits and short-term loans to the repo rate of the RBI,” the bank said in a statement.

But the move will not benefit all its depositors as the new rate is applicable only to those with a balance of over Rs 1 lakh in their accounts.

The repo rate is currently at 6.25 per cent after the February 7 review where the central bank surprisingly lowered the repo rate by 25 bps.

The lender said it will link the savings bank deposits, with a balance above Rs 1 lakh to the repo rate with the current effective rate being 3.50 percent per annum, 2.75 percent below the present repo rate.

It has also linked all cash credit accounts and overdrafts with limits above Rs 1 lakh to the repo rate plus a spread of 2.25 percent.

The risk premia over and above this floor rate of 8.50 percent will be based on the risk profile of the borrower, as is the current practice, the statement said.

To insulate the small deposit-holders and small borrowers from the movement of external benchmarks, the bank has decided to exempt savings bank account holders with balances up to Rs 1 lakh and borrowers with cash credit accounts and overdraft limits up to Rs 1 lakh from linkage to the repo rate, the bank said.

Udayavani is now on Telegram. Click here to join our channel and stay updated with the latest news.

Top News

Former BJP MP Babul Supriyo joins TMC

Wish PM Narendra Modi celebrated his birthday everyday: Congress on 2.5 crore record vaccinations

Bengaluru: Youth fakes kidnapping to extort Rs 5 lakh from father

IT dept alleges Sonu Sood, associates evaded Rs 20 cr tax, violated FCRA

Can’t continue in the party with this kind of humiliation: Amarinder Singh to Sonia

Dhoni as mentor will benefit bowling unit as well as help introvert players blossom: Sehwag

Kerala FM seeks extension of GST compensation regime

Related Articles More

Come Jan 1, non-filers of 1 monthly GST return to be barred from filing GSTR-1

GST Council extends lower tax rate on COVID drugs till Dec 31; petroleum products not to be included under GST

World Bank Group to discontinue Doing Business report

FM Nirmala Sitharaman announces Rs 30,600 crore govt guarantee for bad bank

GST Council to meet on Friday; rate review, tax concession to 11 COVID drugs on cards



Goat Farming Business Ideas | Women Farmer from Karnataka

Monkey takes revenge on auto driver at Kottigehara

Udayavani News Bulletin 17-09-2021


Latest Additions

Former BJP MP Babul Supriyo joins TMC

Fisherman’s body found

SC favours disbursal of Rs 25 cr for welfare of children orphaned during pandemic in Maha

Wish PM Narendra Modi celebrated his birthday everyday: Congress on 2.5 crore record vaccinations

Bengaluru: Youth fakes kidnapping to extort Rs 5 lakh from father

Thanks for visiting Udayavani

You seem to have an Ad Blocker on.
To continue reading, please turn it off or whitelist Udayavani.