The Hindu Business Line : SBI cuts deposit rates; benchmark PLR at 10.25 pc

STATE Bank of India has fixed its benchmark prime lending rate (PLR) at 10.25 per cent, effecting a cut of 0.25 percentage point from the existing rate. The bank has also announced a deposit rate cut of 0.25 percentage point in particular maturities.

The new lending rate to be called `State Bank Advanced Rate' and will be effective January 1, 2004. With this tenor linked prime lending rates will be discontinued, said a release from the bank.

All existing borrowers of loans with rates presently linked to the PLR, State Bank Medium Term Lending Rate and State Bank Short Term Advance Rate will now be linked to the new rate, and will therefore, enjoy a reduction of 25 basis points in terms of interest rate with effect from January 1, said the release.

In recent weeks, three major banks have snipped their benchmark PLR in response to the Reserve Bank of India suggesting to banks to determine benchmark PLR by taking into account actual cost of funds, operating expenses and a minimum margin to cover regulatory requirement of provisioning/capital charge and profit margin.

Last week, Bank of Baroda and Canara Bank had slashed their PLRs by 0.25 per cent to 10.50 per cent and 10.75 per cent, respectively. Earlier, Union Bank of India cut its rate to 10.75 per cent and Bank of India, Syndicate Bank, UCO Bank, HDFC Bank, among others, are said to be reviewing their rates.

On the deposit front, SBI has announced a 25 basis point cut from January 1, 2003, onwards for deposits with maturity above two years.

The deposit rate on the one-year to less than three years has been brought down to 5 per cent per annum. Earlier, the maturity buckets had been different with the one-year to less than two years at 5 per cent and two years to less than 3 years at 5.25 per cent. The above three years bracket has also been lowered to 5.25 per cent per annum (5.50 per cent).

The remaining rates are unchanged at 4 per cent for 15 days to 45 days, 4.50 per cent for 46 days to 179 days and 4.75 per cent for 180 days to less than one year.

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SBI cuts deposit rates; benchmark PLR at 10.25 pc