Lending major SBI on Friday said it will link key pricing decision for savings bank deposits and short term loans to the repo rate of the RBI.
According to the lending major, the step is in order to address the concern of rigidities in the balance sheet structure and for quick transmission of changes in RBI's policy rates.
The linking will be done from May 1, 2019.
"The major steps taken in this direction are... linking of savings bank deposits, with balances above Rs 1 lakh to repo rate with current effective rate being 3.50 per cent p.a (2.75 per cent below current repo rate of 6.25 per cent)," the bank said in a statement.
"All cash credit accounts and overdrafts with limits above Rs 1 lakh also to be linked to the repo rate (current repo rate 6.25 per cent plus a spread of 2.25 per cent). The risk premiums over and above this floor rate of 8.50 per cent would be based on the risk profile of the borrower, as is the current practice."
"In order to insulate the small deposit holders and small borrowers from the movement of external benchmarks, SBI has decided to exempt Savings Bank account holders with balances up to Rs 1 lakh and borrowers with CC or OD limits up to Rs 1 lakh from linkage to the repo rate."
--IANS
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