SBI to Adopt RBI’s Repo Rate As External Benchmark
Mumbai: State Bank of India, the countrys largest lender, has decided to adopt RBIs repo rate as the external benchmark for all floating rate loans for MSME, home and retail loans from October 1.
The benchmarks to which banks can link the new floating rate retail loans for the purpose of transmission are — RBI’s repo rate, Government of India 3-Months Treasury Bill yield published by the Financial Benchmarks India Private Ltd (FBIL), Government of India 6-Months Treasury Bill yield published by the FBIL or any other benchmark market interest rate published by the FBIL.
Leaving the options to banks, the RBI said banks are free to offer such external benchmark linked loans to other types of borrowers as well.
The RBI had earlier asked banks to link all new floating rate personal or retail loans (home, auto) and floating rate loans to Micro and Small Enterprises to external benchmarks from October 1.
The SBI said it has voluntarily extended the external benchmark based lending to Medium Enterprises also, to boost lending to the MSME sector as a whole.
The SBI had introduced repo-linked floating rate home loans from July 1. It said a few modifications have been made in the scheme effective October 1 to comply with the latest regulatory guidelines.