State Bank of India introduced repo rate-linked home loans. SBI, the country’s largest bank by assets home loans linked to the repo rate from July 1, 2019.
There are 10 key new facts, repo rate-linked SBI home loan-
1. Key interest rate reduced to 5.75.
2. Repo rate-linked home loan will make changes in the key interest rate by the central bank would be passed on directly to the customers.
3. Interest rates applicable to regular home loans are decided by the commercial banks on a time basis.
4. The Reserve Bank of India on several occasions in the past few months urged the commercial banks to transmit the rate cuts to the public.
5. State Bank of India benefit from the latest reduction in the repo rate has been passed fully to cash credit account and overdraft customers with limits of over Rs. 1 lakh.
6. After the move, the effective repo-linked lending rate (RLLR) for a cash credit and overdraft customers will be 8 percent. These changes will also take effect on July 1.
7. The Reserve Bank of India’s Monetary Policy Committee (MPC)lowered the repo rate by 25 basis points and switched to an “accommodative” stance from “neutral”.
8. The decision by the RBI to ease the monetary policy follows official data last month showing India lost its status as the fastest growing major economy to China.
9. RBI reduced the repo rate each in its policy reviews in February and April.
10. SBI has a share of around 35 percent in home loans and auto loans.