Fintotal News Analysis | SBI Reduces Interest Rate on Pre 2010 Floating Rate Loans
SBI Reduces Interest Rate on Pre 2010 Floating Rate Loans
Ruby Jacob, 24 Sep 2012

After State Bank of Indias Base Rate cut in the last week it was turn for its Benchmark Prime Lending Rate (BPLR) to go down. BPLR was brought down by 25 basis points from 14.75% to 14.5% on Saturday. New rate will be effective from 27 September.

BPLR is used as reference rate for computing interest rate on floating rate loans issued prior to 2010. This is the rate bank charge its top, creditworthy customers. For loans issued after 2010 banks use Base Rate for reference, as per RBI directions.

Reduction in BPLR will translate to lower outgo in EMIs for you if you had taken a floating rate loan from SBI before 2010. This means you pay Rs 16.85 less on every Rs 1 lakh loan of 20 years.

Last week SBI lowered base rate by 25 basis points bringing it to 9.75%. 100 basis points make 1 percentage. This is following RBI slashing CRR for banks by 25 basis points in its mid-quarter policy review recently. Three weeks ago SBI had also slashed rates on deposits in various brackets.

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