SBI has decided to cut the home loan repayment rate. After going up for months, EMIs are set to come down. This follows a decision by four public sector banks, led by SBI, to cut their prime lending rates further by 0.25% to 0.50%. SBI’s new PLR will be 12.25%, effective from February 27. Canara Bank, Bank of India and Union Bank have all cut their PLRs to 12.75%.
People who need home loans and car loans can now bargain for a better deal. It is also expected to make the borrowing cheaper for businesses.
Industry analysts say that this move was inevitable. Over the last couple of quarters, bank lending had dropped considerably after RBI raised interest rates in an attempt to contain inflation. The credit-to-deposit ratio, which was at a high of 90%, is now 55%. With borrowers shying away, banks are flush with funds. Bankers would like to have people and businesses borrow more because that will help the economy grow.