138th Day Of Lockdown

Maharashtra49026232728117092 Tamil Nadu2850242275754690 Andhra Pradesh2170401296151939 Karnataka164924842322998 Delhi1441271293624098 Uttar Pradesh118038698332028 West Bengal89666630601954 Telangana7751354330615 Bihar7578648673419 Gujarat68855517922604 Assam5549737225132 Rajasthan5065636310776 Odisha4419328698307 Haryana4005433444467 Madhya Pradesh3729827621962 Kerala3312020862107 Jammu and Kashmir2439020862459 Punjab2193014040539 Jharkhand165427503154 Chhatisgarh11408831987 Uttarakhand89015731112 Goa7947559570 Tripura6014408437 Puducherry5123291475 Manipur3635192711 Himachal Pradesh3242201513 Nagaland26888937 Arunachal Pradesh204913263 Chandigarh137482023 Meghalaya10234236 Sikkim8544061 Mizoram5672890
Business Companies 09 Mar 2019 In a first, SBI link ...

In a first, SBI links pricing of loans, deposits to repo rate

PTI
Published Mar 9, 2019, 12:17 pm IST
Updated Mar 9, 2019, 12:17 pm IST
The repo rate is currently at 6.25 pc after the Feb 7 review where the central bank surprisingly lowered the repo rate by 25 bps.
The new rates will be effective May 1.
 The new rates will be effective May 1.

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 1m 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 balance above Rs 1 lakh to the repo rate with current effective rate being 3.50 per cent per annum, 2.75 per cent 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 per cent.

 

The risk premia over and above this floor rate of 8.50 per cent 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. 

...




ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT