SBI Cuts Interest Rates by 25 Bps From December 15

New Delhi: The State Bank of India (SBI), the country’s largest public sector lender, has announced a 25 basis points (bps) reduction in its benchmark lending rates, effective December 15, following the Reserve Bank of India’s (RBI) recent repo rate cut. This decision is expected to bring direct EMI relief to millions of borrowers, particularly those with home loans and other retail loans, while also resulting in lower interest rates on select fixed deposit (FD) schemes.

SBI’s move signals faster monetary transmission in the banking system and reinforces the RBI’s intent to stimulate credit growth and consumer spending.

RBI Rate Cut: Background and Context

The RBI recently reduced its policy repo rate, citing:

• Moderating inflation

• Stable macroeconomic indicators

• Need to support growth amid global uncertainties

As banks link most retail loans to external benchmarks, changes in the repo rate are now transmitted more quickly to borrowers compared to earlier regimes.

How SBI Has Passed on the Rate Cut

SBI has reduced:

• External Benchmark Lending Rate (EBLR)

• Repo Linked Lending Rate (RLLR)

These benchmarks are directly linked to the RBI repo rate, ensuring automatic rate adjustments.

SBI Benchmark Lending Rates: Old vs New

Note: Final loan rates vary based on credit score, loan type, and risk category.

Loan Products Affected by SBI Rate Cut

The following loans will see rate reductions if linked to EBLR/RLLR:

• Home loans

• Auto loans

• Personal loans

• Education loans

• MSME and small business loans 

Home Loan EMI Impact: Detailed Scenarios

Illustrative EMI Reduction (Floating Rate Loans)

Existing Borrowers vs New Borrowers

Existing Borrowers

• Automatic benefit if the loan is externally benchmarked

• EMI reduction applies from the reset date

• Option to keep EMI the same and reduce tenure

New Borrowers

• Lower starting interest rates

• Better affordability

• Higher loan eligibility due to lower EMIs

Impact on SBI Fixed Deposit (FD) Rates

SBI has also revised FD rates downward on select tenures, including its popular Amrit Vrishti Fixed Deposit scheme, reflecting the softer interest rate environment.

SBI FD Rates: Before vs After (Select Tenures)

Senior citizens will continue to receive additional interest, though overall returns may soften.

Impact on Depositors: What Should Investors Do?

Key Considerations

• Lock in rates sooner if planning long-term deposits
• Prefer short-term FDs in a falling-rate cycle
• Consider diversification into:

• • RBI floating rate bonds

  • Debt mutual funds

  • Laddered FD strategy

Macro Impact of SBI Rate Cut

• Boosts housing demand

• Improves affordability

• Encourages retail credit growth

• Signals easing cycle continuation

• May prompt other banks to follow

Key Highlights Summary

• SBI cuts lending rates by 25 bps

• Effective from December 15

• Home loan EMIs to decline

• Retail & MSME loans impacted

• FD rates revised downward

• Faster transmission of the RBI policy

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