SBI likely to cut home loan rates

A day after Reserve Bank of India reduced the policy rates, State Bank of India, the country's largest lender, said it may reduce home loan rates though there may not a reduction in the benchmark loan rates.

"It is difficult for us to cut deposit rates,” Rajnish Kumar said on the sidelines of an event.

SBI's deposit rates are lower than most other banks.

He said since deposit rate cut was not possible, a reduction in the benchmark lending rate or the MCLR (Marginal Cost of Funds based Lending Rate) was not likely. However, there could be some reduction in the home loan rates though the quantum would be small. "There will be an announcement shortly."

Such a reduction was possible by lowering the spread between the MCLR and the actual lending rate.

SBI home loans are linked to one year MCLR.

On Thursday, Reserve Bank of India reduced repo rate by 25 bps to 6.25% to address growth concerns. This was the first rate cut by the central bank in one amd half years. RBI governor Shaktikanta Das said he would expect monetary transmission from banks. Mr. Das is expected to chiefs of banks in the next two weeks to discuss, among others, monetary transmission.