SBI Cuts MCLR by 35 bps Home Loan EMIs Down by Rs. 52/ L for Most Borrowers

SBI Cuts MCLR by 35 bps Home Loan EMIs Down by Rs. 52/ L for Most Borrowers

Bringing another repayment relief to borrowers, the State Bank of India (SBI) has announced a rate cut in MCLR by 35 bps across all tenors. It is the eleventh consecutive MCLR rate cut by the largest lender in the country in FY 2019-20. With effect from April 10, 2020, one-year MCLR will stand at 7.40% per annum from the existing 7.75%.

The rate cut will impact term loans such as Home Loan, Auto Loan, or Personal Loan linked to Marginal Cost of funds based Lending Rate (MCLR). On February 27, 2020, the Reserve Bank of India announced a repo rate cut of 75 basis points announced. Thus the EMI burden of SBI Home Loan borrowers with MCLR linked rates as well as Repo Linked Lending rates have come down drastically this month.

Apply SBI Personal Loan @ 10.75%  Personal Loan in 2 Hours

Furthermore, in the wake of RBI’s advice to extend repayment relief to borrowers due to the COVID pandemic, the SBI had also offered 3 Months EMI Moratorium to its customers last week. Thus SBI Home Loan customers can opt for a loan holiday from March 2020 to May 2020.

After the announcement SBI said, this cut will bring EMIs of eligible Home Loan accounts down by around Rs 24.00 per 1 lakh on a 30-year loan. However, it is interesting to note here that the impact would be much broader for most of the borrowers.

Most Home Loans linked with MCLR have a 1 year or 6 months reset date. Thus, the eligible account with 1 year reset date would currently be serving 1 year MCLR rate of April 2019 at 8.15%. The EMIs per lakh for 30 year tenor will therefore reduce to Rs 692 from Rs 744.

The EMI reduction for Rs 30 Lakh loan for 30 years will thus be more than Rs 1500.

  1 Year SBI MCLR Rate EMI for 1 Lakh Home Loan for 30 Years Impact per 1 Lakh for 30years Impact on 30 Lakh for 30years

10 April 2020


Rs. 692

10 March 2020


Rs. 716

Rs 24


10 April 2019


Rs. 744

Rs 52

Rs. 1556

Following the reduction in lending rate, the lender also reduced the cost of bank borrowing by sharply reducing savings bank deposits interest rates by 25 bps. The new deposit rates will be effective from 15 April 2020.


✅ What is MCLR?

MCLR is the marginal cost of funds-based lending rate. It is the benchmark lowest interest rate at which a bank can lend to end customers. MCLR is also a tenor-linked internal benchmark rate. The tenor is the time intervals at which the rate of loan will be reset, and the rates are determined by the bank internally.

✅ What all types of MCLR rates do SBI announce?

SBI announces, Overnight, 1 month, 3 months, 6 months, 1 year, 2 years, and 3 years lending rates. According to the reset period the lending rate changes.

✅ How does the bank calculate MCLR?

In order to calculate MCLR, the bank considers the sum of its borrowings. The sources of bank borrowed funds are Fixed Deposits (FD), Savings Accounts, Current Accounts, Equity, Loans from RBI loans, etc.

✅ Why the MCLR rate cut impacts my EMI?

Home Loans at a Floating rate of interest were earlier linked to MCLR which is the bank’s internal benchmark rate for setting the effective rate of interest on the loan. Now the new loans are offered at RLLR which is an external benchmark. If you have borrowed an SBI Home Loan linked to 1 year MCLR as of June 2019, the rate of interest on your loan will adjust only in June 2020.

✅ How do I know if my loan EMI will reduce?

If your loan reset period falls in April 2020, your EMI will certainly reduce.

✅ Why my SBI Home Loan EMI didn’t change despite MCLR rate cut?

Only those borrowers who have their reset date in April 2020 will benefit from the change in MCLR this month. Also, if your loan is linked to RLLR or at a fixed rate of interest, there will be no impact of MCLR change on your loan EMI.

✅ What is the difference between Mclr and the repo rate?

MCLR is the internal lending benchmark rate, while the repo rate is an external benchmark lending rate. The bank sets MCLR based on its borrowings and the RBI announces the repo rate. The change in MCLR linked rate depends on the reset tenor and the current prevailing MCLR, while the repo rate linked loans will adjust every time the RBI announces the change in repo rate.

Share This:
Category: #mmm news