Banks have revised FD Interest Rates and Home Loan Rates in February 2020

Written by Vidya Kumar

February 18, 2020

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Summary: The RBI announced its monetary policy in February 2020. Though there were no rate cuts or changes in CRR, the other measures have given banks to have higher liquidity. Therefore banks such as SBI, BoB, etc. have amended interest rates on loans and FDs.

The Reserve Bank of India (RBI) announced its monetary policy recently. Some of the measures announced have impacted the interest rates on various financial instruments offered by banks. Here is an overview of the impact –

  • Many banks have cut their marginal cost of funds-based rate (MCLR) rate. This means your EMIs on loans can go down as the interest rate on loans will be reduced. 
  • State Bank of India (SBI) has reduced the MCLR by 5 bps across different maturity periods. The one-year MCLR is 7.85% with effect from February 2020 as opposed to the earlier rate of 7.90%
  • Bank of India (BOI) has reduced MCLR by 10 bps (0.10%) for loans with maturity up to 6 months. BOI has also reduced interest rates on the housing loans and vehicle loans. Housing loan will be available from 8% and vehicle loans will be available from 8.50%.
  • Oriental Bank of Commerce reduced its MCLR by up to 10 bps for one-month loans and the overnight rates by 5 bps 
  • Canara Bank has reduced its MCLR for a one-year tenor by 15 bps, Here are the interest rates for different loan tenures –
Tenure
​Interest Rate
​Overnight and One month Loan
7.65%
Three month loan
7.95%
Six month loan
8.10%
One year loan
8.20%

​The downside for the bank customers and investors is that the Fixed Deposit (FD) rates have been slashed too. The recent announcements have improved liquidity and cash position for banks which has led to a fall in FD interest rates. Here is the latest data on FD interest rates for some banks –
Bank
< 1 year
​3 years  – 5 years
> 5years
​Bank of Baroda
​4.50%-5.50%
6.25%
6.00%
Axis Bank
​5.80%-6.40%
6.50%
6.50%
SBI
​4.50%-5.50%
6.00%
6.00%
IDBI
3.50%-6.30%
6.25%
6.00%-6.25%

As on February, 2020

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