From Oct 1, all SBI floating rate loans to be linked to repo rate

The State Bank of India (SBI) said on Monday it will use the repo rate as the external benchmark for its floating rate loans for MSME, housing and retail loans. According to a press release issued by the bank, this will come into effect from October 1.

The decision has come after the Reserve Bank of India (RBI) mandated all banks to link their floating rate loans to an external benchmark.

RBI in its notification dated September 4 has asked all the banks to offer their loans with interest rates linked to an external benchmark. These are

a) RBI's repo rate
b) Government of India 3-month treasury bill yield
c) Government of India 6-month treasury bill yield
d) Any other benchmark market interest rate published by Financial Benchmarks India Private Ltd.

SBI was the first bank to offer repo rate linked home loans from July 1, 2019.

However, the bank, in a response to a user query, said on its official Twitter handle last week that it had withdrawn its repo linked loan scheme. "Kindly note that RLLR based home loan scheme have been withdrawn. You can get the home loan migrated to MCLR based home loan."

The press release issued on Monday by SBI stated that few modifications have been made to the scheme launched in July. However, what those changes will be announced on the bank's website soon.