The development comes after Reserve Bank of India’s Monetary Policy Committee (MPC) delivered its fourth repo rate cut in a row. “SBI has affected the full transmission of repo rate cuts by RBI and has passed on the benefit of the repo rate reduction by 85 basis points during the current financial year to its cash credit/overdraft customers with limits above Rs 1 lakh,” the lender said in a statement.
Cash Credit (CC) is a short-term source of financing which enables customers to withdraw money from a bank account without keeping a credit balance. Overdraft account or OD is a type of account from which customers can withdraw amount even if there is no fund in the account. The bank sanctions a specific limit and the account can go in negative up to that limit. The rate effective from today onwards is the third reduction by SBI in this financial year has cut the rates by 5 bps each in April and May, while it’s home loan rates have come down by 20 bps during this period
With this cut, SBI’s effective repo linked lending rate (RLLR) for CC/ OD customers will stand revised to 7.65% from September 1.
Many analysts expect another rate cut by the RBI in its August review. As of March 31, 2019, the bank had a deposit base of over Rs 29 lakh crore. Since the cut by the RBI in its June review, Bank of Maharashtra, Corporation Bank, Oriental Bank, and IDBI Bank have reduced their benchmark lending rates by 5-10 basis points. That marked the third straight reduction of 25 basis points in the central bank’s bi-monthly policy review.