(Repeats to widen distribution without changes to text)
MUMBAI Jan 1 State Bank of India, the
country's biggest lender by assets, said on Sunday it had cut
its lending rates by 90 basis points for maturities ranging from
overnight to three-year tenures, after experiencing a surge in
After the move, its so-called overnight marginal cost of
funds-based lending rate (MCLR) fell to 7.75 percent from 8.65
percent, while three-year loan rates will now be 8.15 percent
from 9.05 percent previously.
Lending rates were also cut across other maturities
Banks have received an estimated 14.9 trillion rupees
($219.30 billion) in old 500, and 1,000 rupees notes from
depositors since the government in Nov. 8 unexpectedly banned
the banknotes in a bid to fight counterfeiting and bring
unaccounted cash to the economy.
That had raised expectations banks would have room to cut
lending rates, which is seen as vital to increase credit growth
and spark a revival in private investments.
Although India's gross domestic product grew 7.3 percent in
the July-September quarter from a year earlier, the fastest pace
of growth among large economies, much of that has been led by
Lower lending rates will be welcome by the Reserve Bank of
India, which has cut the policy rate by 175 bps since the start
of 2015 but has felt banks were being too slow in cutting their
The SBI move also comes after Prime Minister Narendra Modi
on Saturday admonished banks to "keep the poor, the lower middle
class, and the middle class at the focus of their activities,"
and to act with the "public interest" in mind.
Modi's comments were made in a special New Year's eve speech
in which he defended his ban on higher value cash notes and
announced a slew of incentives including channelling more credit
to the poor and the middle class.
($1 = 67.9445 Indian rupees)
(Reporting by Rafael Nam; Editing by Michael Perry)