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<ul><li>Borrowers have not had to pay bigger EMIs thanks to extended <keyword id="6360217" type="General" weightage="20" keywordseo="loan" source="Orion">loan</keyword> tenor until now, but that may change. </li><li>If borrowers push for longer tenors even after the extensions taken due to the last four rate hikes, it will result in the loan becoming negatively amortised. </li><li>Negative amortisation is when original EMIs cannot cover the loan principal which will increase every month. </li></ul>Indian <keyword id="6371902" type="General" weightage="20" keywordseo="home-buyers" source="Orion">home buyers</keyword> who have been paying back lenders through equated monthly instalments (EMIs) are in for a rude shock as the Reserve Bank of India (RBI) raised a key interest rate for the fifth time this year to 6.25% on Wednesday. Experts say, now, lenders will have to bump up monthly payouts. While the quantum of the central bank’s hike was lower than the last three increases – at 35 basis points as opposed to 50-basis point hikes earlier,<a href="https://www.businessinsider.in/finance/news/rbi-hikes-repo-rate-by-35-bps-taking-rates-to-a-high-of-6-25/articleshow/96045841.cms"> the sharp rise in interest rates in the last seven months </a>will increase the <keyword id="6357050" type="General" weightage="20" keywordseo="emi" source="Orion">EMI</keyword> burden extensively. Moreso because those borrowers who have been avoiding a bigger EMI in lieu of an extended loan tenor until now, have exhausted this option. Shrikant Shrivastava, chief risk officer, at India Mortgage Guarantee Corporation said that most banks have fully passed on the repo rate increase of 190 bps – in the last four rate hikes – to the consumers of home loans, till date. With the latest rate hike, he expects EMIs to go up further by another 3-5%. “This rate hike of 190 bps has resulted in a loan tenor increase of around 13 years for borrowers who had initially opted for a 20 years loan period, assuming they had taken a <keyword id="6354730" type="General" weightage="20" keywordseo="home-loan" source="Orion">home loan</keyword> at 6% at the time of home purchase. Alternatively, those borrowers who opted for an EMI increase instead of a loan tenor increase have seen their EMI go up by around 20% already,” said Shrivastava. Current home loan borrowers, who have had their home loan original interest rate at 10-11% and initial <keyword id="15721223" type="General" weightage="20" keywordseo="loan-tenors" source="Orion">loan tenors</keyword> above 25 years — will have no option but to increase their EMIs. Any attempt to increase loan tenor further, would result in the loan becoming negatively amortised. Negative amortisation is when the EMI is unable to cover the monthly interest payment – it means that every month, the loan principal goes up instead of going down, in spite of payments. That would result in the loan ballooning over the long term, making it expensive for the borrower. Here is how much your interest rate will go up Anuj Puri, the chairman of Anarock Group believes that the rate hike is a set back for new and old borrowers both, as borrowers will have to shell out more per month as EMIs. “Soon, banks and lending institutions will follow suit with today’s repo rate hike and increase their marginal cost of fund-based lending rates (MCLR). For existing borrowers, their EMI will be revised at the reset date of their loans,” Puri said. As the rate of interest is hiked by 0.35% and if it is passed on to the consumer by the banks, then the EMI of a loan of ₹10 lakh taken at 8.5% for ten years will increase by around ₹300 per month, said Atul Monga, chief executive and founder of Basic Home Loan. Similarly, for a ₹50 lakh loan outstanding with a bank at a 10% interest rate spread across 20 years, the effective EMI would be ₹48,251. After the rate hike is passed on, the new EMI would be about ₹49,249 – a monthly increase of ₹998. “To deal with the impact of a higher interest rate, it is important to maintain good credit, research the best rate offers, and consider refinancing existing loans to lower the monthly payments. Customers can also opt for long tenures or switch to a floating rate of interest," Monga said. A few real estate consultants, however, believe that the rate at which banks will pass on the interest rate hike might not be as much. “The rise in policy rate leads to an increase in lending rates, which impacts the sentiment of stakeholders. However, the moderation in repo rate hike augurs well for the real estate sector as its pace has slowed down even as the resultant transmission to end-users is likely to be delayed or moderated by the banks,” said Samantak Das, chief economist, and head of research at JLL India. SEE ALSO <a href="https://www.businessinsider.in/finance/news/rbi-downgrades-fy23-gdp-growth-projections-to-6-8-percent/articleshow/96047963.cms">RBI downgrades FY23 GDP growth projections to 6.8% - lower than World Bank and other global agencies</a> <a href="https://www.businessinsider.in/finance/news/rbi-hikes-repo-rate-by-35-bps-taking-rates-to-a-high-of-6-25/articleshow/96045841.cms">RBI hikes repo rate by 35 bps, taking it to 6.25% – Das says bank has ‘Arjuna’s eye’ on inflation</a>

Be prepared to pay higher EMIs: No room for loan tenor increase after RBI’s latest rate hike

The <keyword id="6354731" type="DOMAIN" weightage="20" keywordseo="state-bank-of-india">State Bank of India</keyword> (<keyword id="13222" type="DOMAIN" weightage="20" keywordseo="SBI">SBI</keyword>) here on Wednesday reduced the marginal cost of funds-based lending rate (<keyword id="6376846" type="PERSON" weightage="20" keywordseo="mclr">MCLR</keyword>) by 10-15 basis points across tenors. "The one-year MCLR comes down to 7.75 per cent from 7.85 per cent with effect from March 10, 2020. It's the tenth consecutive cut in MCLR in FY20," the country's largest lender said in a statement. With this, the equated monthly instalments (EMIs) on home loans linked to MCLR will get cheaper by around Rs 7 per Rs 100,000 on a 30-year loan. EMIs on car loans will come down by Rs 5 per Rs 100,000 on a 7-year loan. In view of adequate liquidity in the system, the SBI has realigned the interest <keyword id="6375571" type="UNKNOWN" weightage="20" keywordseo="rates">rates</keyword> on term deposits as of March 10, 2020. The retail term deposit rates have been reduced by 10 bps for one year and above tenor, and 50 bps for up to 45 days. The bulk term deposit rates have been reduced by 15 bps for 180 days and above tenors. --IANS rv/pcj

SBI cuts interest rates making home and car loans cheaper

<ul><li>On an average, a loan could get extended by around ₹3.5-5 lakhs depending on the rupee exchange value at the time of the loan, said Ashwini Kumar, VP at MPower Financing.</li><li>Apart from tuition cost, Indians students also have to support themselves abroad and living expenses are going up as well.</li><li>The third part of the triple whammy is from rising interest rates. </li></ul>19-year-old Sakshi Shewale from Mumbai has been planning to go to Georgia in Europe for her medical course. The course costs around ₹30 lakh for the five-year course and unlike many others, her father is bankrolling it, without her having to take a loan. Yet, in the last few months a lot has changed. Europe is in the throes of a possible recession, the value of Indian rupee is depreciating and more importantly, inflation in the continent is also impacting budgeted expenses. “Looks like I might have to take a loan after all because my living expenses will change drastically. I have spoken to students who live there and they all tell the same story,” Shewale sighs. Her story is similar to a number of Indian <keyword id="15304331" type="General" weightage="20" keywordseo="students-wanting-to-study-abroad" source="Orion">students wanting to study abroad</keyword> but those who have already taken admission this year have it worse – on rupee depreciation alone. Since the beginning of 2022, the rupee has fallen more than 7% against the dollar. <div type="image" title="rupee" height="900" width="1200" msid="94974075" hostid="261" sizebytes="49035"></div> ‘Loans could balloon by ₹3.5-5 lakh’ If a student had taken a loan in March this year, when rupee was at 75 against the dollar, it would add a few lakh into the loan, as per Ashwini Kumar, VP at MPower Financing, a public benefit corporation that helps students to study abroad. For every dollar of the loan, an extra ₹7 is added and it would inflate the loan and the interest as well. “On an average, a loan could get extended by around ₹3.5-5 lakh depending on the rupee exchange value at the time of the loan,” Kumar told Business Insider India. The problems don’t end there. Apart from tuition costs, Indian students also have to support themselves there and living expenses are going up as well. The Eurozone inflation is being <a href="https://www.euronews.com/next/2022/09/30/record-inflation-which-country-in-europe-has-been-worst-hit-and-how-do-they-compare">pegged at 10%, as per estimates</a>. Inflation in the US too has recently <a href="https://economictimes.indiatimes.com/news/international/us/us-inflation-soars-to-8-2-per-cent-highest-in-40-years/articleshow/94842348.cms">hit a 40-year high</a>, messing with economics of students abroad. Most Indian students head to these destinations. The third part of the triple whammy is from rising interest rates. This financial year, the Indian central bank raised repo rates four times and the base rates now stand at 5.9%. More interest rate hikes are expected in the near term and most experts see base rates stabilising once it’s around 6-6.5%. “Loans linked to MCLR and BPLR will see a gradual increase in the interest rate in the near future. The EMIs of current and future borrowers will rise due to this,” said Ankit Mehra, CEO and co-founder of GyanDhan, an education loan market place. Moreover, the psychological impact of a possible depreciation in rupee will also largely play on the minds of US and Europe-bound students and their parents, said Kumar. Students still eye foreign degrees Studying abroad is going to become much more expensive. However, experts say that this is not discouraging students from pursuing their higher education dreams. Shewale too intends to absorb the extra costs but does not intend to change her plans. “The return on investment in terms of quality of education, career growth, international exposure, skills developed, and networking has more intrinsic worth,” said Mehra. Kumar too says that students who are planning to go abroad this year and the next, have been planning it two years before, and it’s unlikely that the road bumps will change their plans, though some may choose to delay it. “There are a few sections of society wherein parents are managing the EMIs on the border, which is due to get affected. A student who had to arrange ₹25 lakh for their overseas education prior to the rate hike will find it difficult to arrange for additional funds given the parental income has not increased proportionally to the hike in the interest rates,” said Mehra. SEE ALSO: <a target="_blank" class="c-link c-message_attachment__title_link" href="https://www.businessinsider.in/business/corporates/news/maggi-maker-nestl-indias-net-profit-grows-8-3-to-668-crore-in-q2/articleshow/94960866.cms">Maggi maker Nestlé India’s net profit grows 8.3% to ₹668 crore in Q2</a> <a target="_blank" class="c-link c-message_attachment__title_link" href="https://www.businessinsider.in/business/corporates/news/ultratech-cements-profit-tumbles-42-yoy-to-756-crore-due-to-higher-power-raw-material-costs/articleshow/94964556.cms">UltraTech Cement’s profit tumbles 42% YoY to ₹756 crore due to higher power, raw material costs</a>

Indian students going abroad to face a triple whammy of inflation, forex and interest rates

Mumbai, Jun 8 () The country's largest lender State Bank of India (SBI) on Monday announced it will reduce marginal cost of fund based lending rate (MCLR) by 25 basis points across all tenors from Wednesday. The one year MCLR has been revised to 7 per cent from 7.25 per cent, the bank said in a release. This is the thirteenth consecutive reduction in the bank's MCLR. The bank also announced to reduce its external benchmark linked lending rate (EBR) as well as repo linked lending rate (RLLR) by 40 basis points from July 1. While EBR has been reduced to 6.65 per cent per annum from 7.05 per cent per annum, RLLR reduced to 6.25 per cent from 6.65 per cent, it said. "Consequently, EMIs on eligible home loan accounts linked to MCLR will get cheaper by nearly Rs 421 and those linked to EBR/RLLR will get cheaper by around Rs 660, for a 30 years loan of Rs 25 lakh," the bank said in the release. The cut in EBR and RLLR by the bank comes after the Reserve Bank of India (RBI) on May 22 had cut repo rate by 40 basis points to 4 per cent. Some of the banks like Punjab National Bank (PNB), Bank of India (BOI) and UCO Bank have already slashed their lending rates linked to the repo rate and MCLR rates. SBI has also reduced its base rate by 75 basis points, from 8.15 per cent to 7.40 per cent, effective June 10. HV BAL BAL

SBI to cut MCLR by 25 bps from Jun 10

New Delhi, Jun 7 () Public sector lender Indian Overseas Bank has cut marginal cost of funds based lending rate (MCLR) by up to 0.30 per cent across all tenors, which will bring down cost for consumer loans. The benchmark one-year MCLR, against which most of the consumer and retail loans are priced, has been cut by 0.20 per cent from June 10, Indian Overseas Bank (IOB) said in a release on Sunday. IOB reduced its interest rate on loans linked to MCLR by 30 basis points in overnight tenor and by 20 bps in one month to one year tenors. Hence, loans linked to MCLR will become cheaper, said the Chennai-based state owned bank. The bank has also reduced its interest rate on loans linked to Repo Linked Lending rate (RLLR) from 7.25 per cent to 6.85 per cent per annum, IOB said. Retail loans (housing, education, vehicle etc) and credit to micro, small and medium enterprises (MSMEs), which are linked to RLLR, will now be available at cheaper rates, it added. KPM BAL BAL

Indian Overseas Bank cuts MCLR by up to 30 bps

New Delhi, Feb 10 () State-owned Bank of Baroda on Monday announced cut in its marginal cost of funds-based lending rates (MCLR) by up to 10 basis points, effective February 12. The reduction will make home, auto and other loans cheaper for new borrowers. With this reduction, the one-year MCLR has come down to 8.15 per cent per annum from 8.25 per cent, according to a bank statement. The reduction in MCLR by the bank comes a day after the Reserve Bank of India left the repo rate unchanged at 5.15 per cent but announced long-term repo operation for up to Rs 1 lakh crore, making cost of funds cheaper for banks. While the one-month MCLR has been reduced by 5 basis points to 7.55 per cent, overnight, three- and six-month rates were down by 10 basis points, it said. Last week, market leader State Bank of India (SBI) announced 5 basis points (bps) reduction in its MCLR across tenors, effective February 10. This was the ninth consecutive cut in MCLR by the bank in the current financial year. DP HRS

Bank of Baroda cuts MCLR by up to 10 bps

Mumbai, Jan 6 () State-owned Bank of Maharashtra Monday said it has reduced its marginal cost of funds based lending rates (MCLR) by up to 45 basis points across various tenors, effective from January 7.
The lender has slashed its one-year MCLR to 8.25 per cent from 8.40 per cent earlier.
Overnight rate has been reduced to 7.60 per cent from 8.05 per cent.
The new one-month and three-month MCLR rate now stands at 7.70 per cent and 7.75 per cent, respectively.
The bank has also revised its base rate by 10 basis points to 9.40 per cent.
Last week, mortgage player HDFC reduced its benchmark lending rate by 0.05 per cent.
New rates will now range between 8.20 per cent and 9 per cent, and the change will benefit all existing customers, HDFC had said.
Recently, SBI had slashed in its external benchmark-based rate by 25 basis points to 7.80 per cent from 8.05 per cent.
The rate cut by lenders come despite the RBI keeping its benchmark repo rate unchanged at 5.15 per cent in December monetary policy review.
While the RBI had cut repo rates by 135 bps in five policy reviews in 2019, the one-year median MCLR has declined by only 49 basis points. 
The weighted average lending rate (WALR) on fresh rupee loans sanctioned by banks declined by only 44 basis points. HV BAL

Bank of Maharashtra cuts MCLR by up to 45 bps

New Delhi, Feb 13 () Allahabad Bank has cut the marginal cost of funds based lending rate (MCLR) by 0.05 percentage points across tenors, effective February 14.The Asset Liability Management Committee of the bank has reviewed the existing MCLR and decided for a downward revision by 5 basis points (bps) across different MCLR tenors, the bank said in a regulatory filing.The benchmark one-year tenor MCLR will now be 8.25 per cent as compared to the existing 8.30 per cent.Most of the consumer loans, such as retail, automobile and personal, are based on one-year MCLR.Likewise, the overnight, three and six-month tenor MCLRs have been cut by 5 bps each in the range of 7.75-8.10 per cent. There has been no change in one-month MCLR of 7.85 per cent.The revised rates will be effective from February 14, 2020, Allahabad Bank said.Several other banks, including State Bank of India, have revised their MCLR following RBI's policy rate announcement on February 6. Even though the regulator kept the repo rate unchange at 5.15 per cent, banks were given other relief in the form of cash reserve ratio (CRR) relaxation for loans to MSMEs. KPM KPM ANUANU

Allahabad Bank cuts MCLR by 5 bps across tenors

Mumbai, May 6 () State-run Bank of Maharashtra on Wednesday said it has introduced a new external benchmark based lending rate linked to six-month treasury bill for better-rated corporate and public sector enterprise customers. For retail and MSME customers, the bank already has repo linked lending rate (RLLR). "We have introduced a new external benchmark rate linked to six month T-bill rate- External Benchmark T-Bill Rate (EBTR) which is 6.50 per cent as on date. The new rates will be applicable to prime corporate and PSU customers," the bank said. From October last year, the Reserve Bank of India (RBI) had mandated banks to link all new floating rate personal or retail loans and floating rate loans to MSMEs to an external benchmark . The RBI allowed banks to link their interest rates to repo rate or three-month or six-month treasury bill. The Pune-based bank further announced reduction in its marginal cost of funds based lending rates (MCLR) across all tenors by 10 basis points from Thursday. Its one-year MCLR has been revised to 7.90 per cent from 8 per cent. For overnight, one month, three months and six months, MCLR have been reduced to 7.40 per cent, 7.50 per cent, 7.60 per cent and 7.70 per cent, respectively. Last month, the bank reduced its MCLR by up to 25 bps across all tenors. HV MRMR

Bank of Maha introduces new external benchmark based lending rate, cuts MCLR

Chennai, Mar 26 (): Public sector Indian Bank onThursday announced five special emergency loans for itscustomers, including corporate clients, Self-Help Groups,retail borrowers and pensioners.The five special emergency loans -- the IND-COVIDEmergency Credit Line for corporate customers, IND-MSE COVIDEmergency loan for micro, small and medium enterprises, SHG-COVID (SAHAYA Loan) for self help groups, IND-COVID emergencysalary loan for retail borrowers and an emergency pension loanfor pensioners, the city-based bank said in a press release."In these challenging times, Indian Bank is committed tostand by its customers. We expect that these credit lines willmeet the immediate liquidity requirements of businesses,"Indian Bank Managing Director Padmaja Chunduru said."SHGs has always been an important part of our businessand with our initiatives we ensure that the group gets all thedesired support for financial independence," she said."We have made these loans repayable over a longer periodbusiness is back on track again," Chunduru, who is also theCEO of the bank, said. The IND-COVID Emergency Credit Line would provideadditional funding of upto 10 per cent of the working capitallimits (both fund based and non-fund based limits) with amaximum limit of Rs 100 crore.Large corporates and medium enterprises would be eligiblefor the loan.The tenure of the loan would be for 36 months with aninitial moratorium of upto six months and would carry fixedinterest rate of 1 year MCLR (Marginal Costs of Funds-basedLending Rate), the release added. VIJ APRRAVINDRANATH APRRAVINDRANATH

Indian Bank unveils five special emergency loans

Mumbai, May 7 () The country's largest lender SBI has increased its home loan rates that are linked to repo rate by up to 30 basis points amid market indications of increased credit risk for borrowers and realty firms in the wake of coronavirus pandemic, according to a senior official. The lender has also hiked interest rates on personal loans against property by 30 basis points. With market leader SBI making the move, other lenders are also likely to follow suit. On Thursday, SBI slashed benchmark lending rate by 15 basis points. Subsequently, rates on home loans linked to Marginal Cost of Funds-based Lending Rate (MCLR) have also come down. Most of the home loans are given on the basis of repo rate or MCLR. While SBI has kept the external benchmark-linked lending rate constant at 7.05 per cent, the increase in home loan rates has been done by raising margins by up to 30 basis points across various home loan products. The new rates came into effect from May 1, as per information available on its website. In the wake of the pandemic and subsequent nationwide lockdown, there has been disruption in economic activities as well as in income for many individuals and companies. The senior official at the State Bank of India (SBI) said spread is the credit risk premium and an increase in spread reflects stress due to COVID-19 impact in the market. The financial market indicates that there is some increase in risk perception for borrowers and the real estate firms which is getting reflected in the credit risk premium charged by the bank, the official said. Despite the increase in the spread, SBI continues to provide home loan at the most competitive rate. The revision by SBI comes just a month after it had reduced home loan rates by 75 basis points. The bank had last revised its External Benchmark Linked Lending Rate (EBR) and Repo Linked Lending Rate (RLLR) on April 1, 2020, immediately after the RBI announced reduction in repo rate by 75 basis points. For home loans up to Rs 75 lakh, SBI has increased the spread by 20 basis points. For home loans up to Rs 30 lakh, the effective rate, which is EBR plus spread, now stands at 7.40 per cent as against 7.20 per cent on April 1, 2020. The effective rate for home loans above Rs 30 lakh and up to Rs 75 lakh has been increased to 7.65 per cent from earlier rate of 7.45 per cent. For home loans above Rs 75 lakh, the new rate stands at 7.75 per cent as against 7.55 per cent earlier. The spread under the Maxgain home loan category has been increased by 30 basis points. The effective rate for Maxgain home loans up to Rs 30 lakh has been hiked to 7.75 per cent from 7.45 per cent. The bank has also increased the spread for its Personal Loan Against Property (P-LAP) by 30 basis points. The effective rate for P-LAP up to Rs 1 crore has been raised to 9.20 per cent as against 8.90 per cent as on April 1, 2020. For loans above Rs 1 crore and up to 2 crore, the effective rate stands at 9.70 per cent as against 9.40 per cent earlier. HV DP RAM

SBI hikes home loan rates by up to 30 basis points

New Delhi, Jan 3 () In line with the country's largest lender SBI, HDFC Ltd on Friday reduced the benchmark lending rate by 0.05 per cent, a move that will bring down interest rate for existing as well new borrowers.
SBI earlier this week slashed in its external benchmark-based rate by 25 basis points to 7.80 per cent from 8.05 per cent.
"HDFC reduces its Retail Prime Lending Rate (RPLR) on housing loans, on which its adjustable rate home loans (ARHL) are benchmarked by 5 basis points with effect from January 6, 2020," the mortgage lender said in a statement.
New rates will now range between 8.20 per cent and 9 per cent, and the change will benefit all existing customers, it said.
The rate cut by lenders come despite the RBI keeping its benchmark repo rate unchanged at 5.15 per cent in December monetary policy review.
During the interaction with media after the announcement of monetary policy on December 5, RBI Governor Shaktikanta Das had said that although it is not in a hurry to keep reducing interest rates, the central bank would work to ensure that transmission turns more effective since much needs to be passed on.
While the RBI had cut repo rates by 135 bps in five policy reviews in 2019, the one-year median MCLR has declined by only 49 basis points. The weighted average lending rate (WALR) on fresh rupee loans sanctioned by banks declined by only 44 basis points. DP BAL

HDFC slashes home loan rate by 0.05 pc

Top two lenders in the country, <keyword id="6354731" type="CITY" weightage="20" keywordseo="State-Bank-Of-India">State Bank of India</keyword> (<keyword id="13222" type="CITY" weightage="20" keywordseo="SBI">SBI</keyword>) and <keyword id="6653" type="CITY" weightage="20" keywordseo="ICICI-bank">ICICI Bank</keyword>, today announced a cut of 0.15 per cent and 0.10 per cent in their lending rates respectively under a new system of computation, signalling a further dip in borrowing costs ahead of the busy season, according to a news agency. 
 Private sector lender ICICI Bank was the first to announce a cut of 0.10 per cent in its marginal cost of funds based lending rate (<keyword id="6376846" type="ORGANIZATION" weightage="20" keywordseo="MCLR">MCLR</keyword>) across tenors, which was followed by a similar move by the country's largest lender SBI, but of a larger measure of 0.15 per cent. 
 
Under the revised rates, the one-year MCLR which determined a slew of products including home loans for SBI stands at 8.90 per cent, while the same for ICICI Bank are at 8.95 per cent. 
 
The revised rates are effective from November 1 in case of both the banks. 
 
SBI has kept the overnight MCLR, which is the most aggressive offering, at 8.65 per cent, while the one month is at 8.75 per cent. 
 
The announcements come after repeated displeasure shown by the regulator for not passing on the benefits of cuts to borrowers and give a boost to the sagging economic growth. They also come ahead of the crucial "busy season" in the second half of the fiscal which sees a spurt in loan demand. 
 
Under the revised rate structure, the one-year MCLR --- which is used for calculating the rate of interest on home loans -- will come down to 8.95 per cent. 
 
The overnight and one-month MCLR will be 8.75 per cent, while the three-month MCLR has been fixed at 8.85 per cent and six months at 8.90 per cent. 
 
The MCLR was introduced from April this year as a transparent and effective alternative by the RBI, after banks refused to pass on the benefits of its rate cuts to the borrowers. 
 Even after the introduction of the MCLR, the central bank continues to be concerned on the issue of transmission which was flagged by Governor <keyword id="6375119" type="UNKNOWN" weightage="20" keywordseo="Urjit-Patel">Urjit Patel</keyword> at his maiden policy review this month. Banks are given a sformula to compute the MCLR based on cost of funds and are required to review it on a monthly basis, when the calls on the new rate structures are taken. 
 "I agree that the transmission through bank lending has been less than anyone of us would have liked to," <keyword id="6362344" type="PERSON" weightage="20" keywordseo="Patel">Patel</keyword> had told reporters. 
 
"We are hoping that over the next quarter or two, keeping in mind the government has also reduced the small savings rates, the MCLR itself will now throw up more transmission." 
 Since January 2015, the <keyword id="50847" type="CITY" weightage="20" keywordseo="Reserve-Bank">Reserve Bank</keyword> has reduced repo rate by 175 basis points, including the recent cut, but banks have reduced their base rates only by 60 basis points.

SBI and ICICI have cut lending
rates

(Eds: Incorporating related stories) New Delhi, Mar 25 () In a bid to help people and businesses affected in the wake of coronavirus outbreak, state-owned lenders including Indian Bank, Union Bank of India and Bank of Baroda on Wednesday announced special emergency loan products. Besides, other public sector lenders -- Canara Bank, UCO Bank and Indian Overseas Bank -- too announced emergency credit line for customers. Public sector banks with about 80 per cent of banking operation have taken steps to ensure the safety of its staff and uninterrupted banking services to customers. "In these challenging times, the bank is committed to stand by its customers. Keeping in view the hardships faced by various sectors of the economy, we have launched products to take care of immediate liquidity requirement of businesses and retail customers," Indian Bank managing director Padmaja Chunduru told . "In wake of #coronavirus outbreak, #UnionBankofIndia unstintingly supports all its existing customers with the launch of Covid Emergency Line of Credit (CELC) which provides additional credit facilities to tide over liquidity issues," Union Bank of India said in a tweet. Another state-run lender Bank of India too announced emergency line of credit for borrowers. Bank of Baroda said it has set up an emergency credit line to provide funds to its existing MSME and corporate borrowers impacted by the outbreak of coronavirus. This follows a similar additional funding facility announced by the country's largest lender State Bank of India for its borrowers, last week. "Canara Bank announces special Loan schemes for our MSME/Corporate/Business/ Agri &amp; Retail Customers, to tide over the liquidity / Cash flow mismatches in the wake of outbreak of COVID -19," the bank tweeted. Indian Overseas Bank launched MSME Product "COVID 19 Line of Support Scheme" for all MSME customers. More banks to follow suit and announce special emergency credit line in days to come. Last week, the country's largest lender State Bank of India also announced an emergency credit line to meet any liquidity mismatch for its borrowers. Sharing details, she said, IND- COVID Emergency Credit Line (IBCECL) for large corporates will provide additional funding of up to 10 per cent of the Working Capital Limits (both Fund Based and Non Fund Based limits) with a maximum limit of Rs 100 crore. Large Corporates and Medium Enterprises that are in the Standard Category would be eligible for this loan, she said, adding the loan tenor will be for 36 months with an initial moratorium of up to 6 months and would carry fixed interest rate of 1 year MCLR. For MSME sector, she said, IND- MSE COVID Emergency Loan is aimed at providing additional funding of 10 per cent of fund based working capital limits with max Rs 50 lakhs. The will have tenure of up to 60 months and there will not be any processing fee. To support the women workforce, the bank has launched the SHG-COVID - SAHAYA LOAN. Under this each member can avail a soft loan of Rs 5000 up to maximum of Rs 1 lakh per SHG. The loan is for 36 months with 6 months moratorium. Indian Bank is servicing 1.68 lakh SHGs with more than 22 lakh women beneficiaries and the product will help them tide over the crisis, she said. For salaried class, the bank has designed IND-COVID Emergency Salary Loan under which one can avail loan up to an amount equivalent to 20 times latest monthly gross salary subject to max of Rs 2 lakhs. Available at concessional rate, this will help meet urgent medical and other expenditure, she said. "We expect that these credit lines will meet the immediate liquidity requirements of businesses. SHGs has always been an important part of our business and with our initiatives we ensure that the group gets all the desired support for financial independence. We have made these loans repayable over a longer period of time to give them the flexibility in operations until business is back on track again. With salaried class and the pensioners, it is more a line to meet their immediate requirements," she said. Talking about efforts made by the bank to keep its staff safe, Chunduru said, the bank is deploying 50 per cent staff on alternate basis. Besides, she said, masks, sanitizers are being ensured and a helpline number manned by a team of doctors has been started for staff and their families to address the query related with the disease. She said, the bank is also identifying non-critical roles would be identified to enable implementation of the work-from-home policy. The bank is also dissuading its customers not to visit bank branches and do transaction through Digital Banking Services (DBS) in order to protect themselves from the coronavirus. The bank is promoting digital payments such as mobile banking, internet banking, debit and credit cards instead of using cash which may require them to go to crowded places for paying bills. To familiarise people about digital payment methods, she said, the bank has designed videos which inform customers about step by step use. For pensioners, she said, the bank is taking extra effort to provide cash at their doorstep as these people are more prone to virus attack. DP MKJ

Banks launch special emergency loans for customers amid COVID-19 crisis

<ul><li>India’s largest private sector bank <keyword id="6354731" type="UNKNOWN" weightage="20" keywordseo="state-bank-of-india">State Bank of India</keyword> (SBI) is yet again reducing the interest rates on term deposits across all maturities. </li><li>From now on, the <keyword id="3159390" type="PERSON" weightage="20" keywordseo="marginal-cost">marginal cost</keyword> of funds based lending rate (MCLR) for a year will be 8.15% per annum. </li><li>In view of the falling interest rate scenario and surplus liquidity, SBI also realigns its interest rate on term deposits (TD) w.e.f. September 10. </li><li> Recently, the Reserve Bank of India reduced the repo rates by 110 bps.</li></ul>India’s largest private sector bank State Bank of India (SBI) will reduce the interest rates on term deposits across all maturities, starting tomorrow i.e. 10 September 2019. The bank slashed the retail term deposit rates by 25 bps or 0.25%. The bulk term deposit rates have slipped by 10-20 bps. "In view of the falling interest rate scenario and surplus liquidity, SBI also realigns its interest rate on term deposits (TD) w.e.f. September 10,” the bank said. However, while this might come as bad news for those who want to store their money in FDs, those keen on taking loans have some good news in store. The bank also announced a reduction in marginal cost of funds based lending rate (MCLR) by 10 bps. Given that, the MCLR for a year will be 8.15% per annum — which is currently at 8.25%. This is the fifth year that the bank has cut MCLR. Recently, the Reserve Bank of India (RBi) reduced the repo rates by 110 bps, and asked the banks to trim the interest rates in favour of the customers. Under this, the borrowers will directly benefit from the RBI rate cuts.

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Be prepared to pay higher EMIs: No room for loan tenor increase after RBI’s latest rate hike

Katya Naidu