New Delhi, April 9: Less than a week after the Reserve Bank of India (RBI) slashed the repo rate by 25 basis points, the country's biggest state-owned lender - State Bank of India (SBI) - has passed on the benefit to its customers. The SBI board on Tuesday decided to bring down the Marginal cost of funds based Lending Rate (MCLR) by 5 basis points.

The 5 basis point or 0.05% per cent reduction in MCLR will result into a reduction of interest rate to 8.6-8.9 per cent on a home loan of Rs 30 lakh. The changes will come into effect from April 10, the bank announced. At present, the home loans amounting upto Rs 30 lakh draw an interest of 8.7-9.0 per cent. Arun Jaitley: RBI Rate Cut Step in Direction to Turn Home Loan EMIs Cheaper Than Rents.

For miscellaneous loans, the one-year MCLR has been brought down from 8.55 to 8.50 per cent.

While SBI is the first major bank to pass on the benefits of repo rate cut to customers, other lenders, including public and private, are expected to follow suit soon.

Finance Minister Arun Jaitley had, last week, said that the long-term goal of slashing repo rate is to bring down home loan EMIs less than house rents. This would motivate a section of the populace who are yet to own their residences to buy their own homes.

On April 4, the RBI had reduced the rep rate to 6 per cent -- the second major reduction in the last two months. The central bank had, in February, brought down the lending rate to 6.25 per cent from 6.5 per cent.

(The above story first appeared on LatestLY on Apr 09, 2019 06:51 PM IST. For more news and updates on politics, world, sports, entertainment and lifestyle, log on to our website latestly.com).