SBI reduces lending rate by 25 bps

Following RBI’s recent 25-basis-point repo rate cut, the State Bank of India, the country’s largest public sector bank, has also slashed its lending rates by 0.25%. Effective tomorrow, i.e., April 15, 2025, the bank’s EBLR (External Benchmark Based Lending Rate), which currently stands at 8.90%, has been revised to 8.65%.

The bank has also revised its RLLR (Repo Linked Lending Rate), bringing it down from 8.50% at present to 8.25% starting tomorrow. This does not include CRP (credit risk premium), which is added to calculate the total RLLR.

Notably, RBI slashed down repo rates by 0.25% for the second consecutive time in its most recent MPC meeting, which concluded on April 9, 2025. At present, the repo rate stands at 6.25%. A dip in the repo rate spells a reduction in EMIs paid by those who have opted for a floating interest rate loan. Since the repo rate is considered as an external benchmark by the majority of Indian banks for determining interest rates, a reduction in repo rates effectively translated to lower interest rates payable by customers.

Conversely, if the repo rate remains unchanged or is hiked, it has an immediate, similar impact on retail, home, and other categories of floating interest rate loans, since EBLR is linked to the repo rate, with banks adding a certain spread to cover their risks and costs. No changes in repo rates mean EMI payouts of borrowers stand as is, while a reduction or increase in repo rates causes an immediate rise or fall in the amount of EMIs paid by borrowers who have availed themselves of loans linked to RBI's repo rate.

As mentioned on SBI's website, "In the event of a change in the benchmark rate (REPO), the interest rate in the home/home-related loan account will also undergo change. An upward revision in the repo rate will result in a consequent increase in the interest rate on home/home-related loans."

As for the MCLR (Marginal Cost of Funds Based Lending) rate, or the minimum interest rate chargeable by the bank to its customers, it remains unchanged. SBI’s one-year MCLR stands at 9%, while its three-year MCLR stands at 9.10%. These, too, will be effective starting tomorrow, i.e., April 15, 2025.