With this reduction, interest rate for existing home loan customers as well as MSME borrowers who have availed loans linked to external benchmark based rate would come down by 25 basis points. SBI's external benchmark based lending rate, which is linked to RBI's repo rate (currently at 5.15%), is fixed at repo rate plus 265 basis points. SBI also charges a premium of 10 basis points to 75 basis points for pricing the effective interest on the home loan for the customer. In October, the RBI had cut its benchmark lending rate or repo rate by 25 basis points to 5.15% , the lowest since March 2010. Banks are required to reset the external benchmark based rate at least once in three months, depending on the movement of the movement of the underlying external rate like repo rate.

Source: Mint December 30, 2019 04:09 UTC