SBI introduces repo-linked home loan product

After linking its short-term loans and large savings deposits rates to the repo rate, the State Bank of India (SBI) has decided to introduce a repo rate-linked home loan product from July 1. The home loans under this product will be priced at 2.65% over the repo rate of 5.75%. So, the home loan interest rate will work out to 8.40%. Currently, SBI offers home loans, which are linked to its marginal cost of funds, at 8.55%. The lender has also reduced the interest rate on cash credit /overdraft customers (limits above Rs1 lakh) after RBI cut its repo rate from 6% to 5.75%. Now the effective Repo-Linked Lending Rate (RLLR) for CC/OD customers is 8%. Repo rate is the key interest rate at which commercial banks borrow short-term funds from the Reserve Bank of India (RBI).