State Bank of India Shares In Focus After Public Sector Lender Announces Rate Cut

Shares of public sector lender State Bank of India Ltd were in focus on February 17. The stock fell nearly 2 per cent to hit an intraday low of Rs 711.55 apiece on the NSE in early trade. The bank announced a cut in interest rates for several retail and business loans.

Earlier on February 7 the Reserve Bank of India (RBI) cut its benchmark repo rate. The rate was cut by 25 basis points to 6.25 per cent from 6.50 per cent. Following the announcement SBI cut its External Benchmark-based Lending Rate (EBLR) and Repo Linked Lending Rate (RLLR) by 0.25 per cent or 25 bps. The revised lending rates came into effect on February 15. However, the bank has kept the marginal cost-based lending rates (MCLR), Base rate, and Benchmark Prime Lending Rate (BPLR) unchanged.

Notably, banks and other lending institutions are expected to follow the rate cut and decrease their lending rates on loans.

As per the public sector bank’s website, all home loans offered by the lender are linked to the External Benchmark Lending Rate (EBLR). The bank’s prevailing EBR is 8.9 per cent (RBI Repo Rate 6.25 per cent + 2.5 per cent spread). After the cut, the bank is offering home loans at 8.25 per cent to 9.2 per cent interest rates.

The interest rate for the maxgain home loan (overdraft) option ranges between 8.45 per cent to 9.4 per cent. The bank is offering top-up loans at rates ranging between 8.55 per cent to 11.05 per cent and top-up (overdraft) loans at rates ranging between 8.75 per cent to 9.7 per cent. The interest rates for loans against property range from 9.75 per cent to 11.05 per cent.

The rate cut announced by RBI was the first one in a span of nearly five years. The cut is likely to make borrowing cheaper and stimulate consumption or economic activity.

Shares of SBI have slipped 5.6 per cent in a year on the NSE. The stock has fallen 9.41 per cent Year-To-Date (YTD) and dipped 12.14 per cent in six months. In a year the stock has traded lower by 5.91 per cent in a month. At the time of writing this story, SBI shares traded at Rs 720.5 apiece on the NSE, down by 0.23 per cent.