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SBI to adopt repo rate as external benchmark for all floating rate loans from October 1

Updated - September 23, 2019 10:33 pm IST - Mumbai

Cautious stance: RBI feels borrowers may find it difficult to service loans once normal rates take effect.

Cautious stance: RBI feels borrowers may find it difficult to service loans once normal rates take effect.

State Bank of India on Monday said it will adopt repo rate as the external benchmark for all floating rate loans for MSME, home and retail loans, from October 1, 2019.

On September 4, the Reserve Bank of India (RBI) had mandated all banks to link all new floating rate personal or retail loans and floating rate loans to micro, small and medium enterprises (MSMEs) to an external benchmark from October 1 onwards.

We have decided to adopt repo rate as the external benchmark for all floating rate loans for MSME, housing and retail loans effective October 1, 2019, the bank said in a release.

The RBI gave the banks options to benchmark their floating rate loans either to repo rate, three-month or six-month treasury bills or any benchmark market interest rate published by Financial Benchmarks India Private (FBIL).

The bank has also extended the external benchmark-based lending to medium enterprises, to boost lending to the MSME sector as a whole.

It had introduced floating rate home loans effective July 1, 2019, but has made some modifications in the scheme effective October 1, 2019, to comply with the latest regulatory guidelines, the release said.

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