Liquidity has been severely affected off late. This is all thanks to the pandemic. It has led to job losses all over the world and also severe salary cuts in many cases. As a result, the buying capacity of the people has reduced significantly. It has led to a halt in the cash flow in the market. In such a scenario, many have to apply for a loan to settle themselves. But then again with the cash crunch ongoing, it is not practical to expect people to take loans at the existing home loan interest rates. All loans, particularly home loans, have taken a hit concerning how many people are applying. It has forced the RBI’s hand. There has been a reduction in the repo rate by 75 basis points (bps). In other words, the repo rate has gone down from 5.15% to 4.40%. This step is hopefully going to stem the cash crunch.

The first back to pass on this benefit to its customers is going to the State Bank of India. The SBI home loans are set to get much more affordable now.

There is a clause, and the benefits can be reaped by only certain borrowers. Firstly, those whose loans are under the aegis of External Benchmark linked lending rate (EBR). The other being loans linked to the Repo Linked Lending Rate (RLLR).

Let us look at the new structure of loans that SBI is offering (floating).

AMOUNT TO BE                        SALARIED


                                                   TERM LOAN                         MAXGAIN

Till 30 lacs                                   EBR + 15 bps

                                                    ER: 7.20%                            EBR + 40 bps

                                                    (ER: Effective Rate)              ER: 7.45%

Above Rs 30 Lacs                       EBR + 40 bps                       EBR + 65 bps

to Rs 75 Lacs                              ER: 7.45%                             ER: 7.70%

Above Rs 75 Lacs                       EBR + 50 bps                        EBR + 75bps

                                                     ER: 7.55%                            ER: 7.80%

The above came into effect from 1st April 2020. Now after the latest shakeup of rates by SBI the EBR is down to 7.05% per annum as opposed to 7.80% per annum before. Likewise, the RLLR has also decreased to 6.65% per annum as opposed to its earlier rate of 7.40% per annum.

After this latest reduction, SBI home loans will get way cheaper ( those linked to RLLR/EBR). It is noteworthy that EMI will lessen by about Rs. 52 for every 1 lakh in case of a home loan with a tenure of 30 years.

Other SBI home loans may also get reduced. Such as the SBI home loans under MCLR, which is the lending rate based on marginal costs, are likely to go down. A proper decision has not yet come out, but it is almost certain. A meeting of the SBI’s asset management committee is to take place soon. The decision is to take place then.

Further, SBI declared its intent in helping the public struggling to repay loans. It announced that from the 1st week of April they would increase the timeline to pay all settlement amounts by 3 months.

There are a lot of settlement schemes under whose aegis the people can settle their affairs. These include several schemes like the SBI Otis 2019 or the Rin Samadhan 19-20. Everyone has to settle all payments by 30th June 2020.

All these little snippets of news are great news for the people looking to apply for a home loan. With many facing the brunt of the pandemic dreams of owning a home was fast fading. But the low rates of the home loans offered by SBI has revived an interest again. SBI home loans are already market leaders in their field. Such customer-centric initiatives will only serve to attract more customers. The negative impact is that the Fixed deposit rates have witnessed a sharp drop. They have decreased substantially. The cuts range from 20 bps to 50 bps across different schemes.

However, all in all, considering that banks are reeling under the effect of coronavirus such steps bring hope. Banks are an important aspect of the economy, and such steps are encouraging to the people. They show that despite their losses, the customer comes first.

So go out now and apply for the SBI home loan. That dream home is waiting for you!