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Which public sector bank, has become the first bank in the country that has linked its deposit accounts and short term loans to an external benchmark?
- a)State Bank of India (SBI)
- b)Canara Bank
- c)Indian Bank
- d)Bank of Baroda
- e)None of these
Correct answer is option 'A'. Can you explain this answer?
Verified Answer
Which public sector bank, has become the first bank in the country tha...
India’s largest bank State Bank of India (SBI) has moved to a new interest rate regime on large savings account deposits with balance above Rs 1 lakh as well as short-term loans like overdraft and cash credit. In March 2019, SBI has announced that it will link its interest rate on large savings account deposits and short term loans to RBI’s repo rate which would be effective from May 1, 2019.By this move, SBI became the first bank in the country which has linked deposit accounts and short term loans to an external benchmark.Currently, repo rate is 6%. So according to external benchmarking formula, the large savings account with balance above Rs 1 lakh earn less interest rate as compare to small savings account. However, if the repo rate increases and goes above 6.25% then large savings account will earn more interest rate than small savings account.
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Which public sector bank, has become the first bank in the country tha...
State Bank of India (SBI)
The State Bank of India (SBI) has become the first bank in the country to link its deposit accounts and short term loans to an external benchmark. This move is in line with the Reserve Bank of India's directive to link all new floating rate personal or retail loans and floating rate loans to micro and small enterprises to an external benchmark.
Key Points:
- By linking its deposit accounts and short term loans to an external benchmark, SBI aims to improve transparency and make the transmission of policy rates more effective.
- The external benchmark linked lending rate (EBR) will be linked to the repo rate and will be effective from October 1, 2019.
- This move is expected to benefit customers as any changes in the repo rate will be directly passed on to them, leading to faster transmission of policy rate changes.
- SBI's move is seen as a step towards ensuring better transmission of monetary policy changes and making the banking system more responsive to policy rate changes.
Overall, SBI's decision to link its deposit accounts and short term loans to an external benchmark is a significant move that is aimed at benefiting customers and improving transparency in the banking system.
The State Bank of India (SBI) has become the first bank in the country to link its deposit accounts and short term loans to an external benchmark. This move is in line with the Reserve Bank of India's directive to link all new floating rate personal or retail loans and floating rate loans to micro and small enterprises to an external benchmark.
Key Points:
- By linking its deposit accounts and short term loans to an external benchmark, SBI aims to improve transparency and make the transmission of policy rates more effective.
- The external benchmark linked lending rate (EBR) will be linked to the repo rate and will be effective from October 1, 2019.
- This move is expected to benefit customers as any changes in the repo rate will be directly passed on to them, leading to faster transmission of policy rate changes.
- SBI's move is seen as a step towards ensuring better transmission of monetary policy changes and making the banking system more responsive to policy rate changes.
Overall, SBI's decision to link its deposit accounts and short term loans to an external benchmark is a significant move that is aimed at benefiting customers and improving transparency in the banking system.
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Which public sector bank, has become the first bank in the country that has linked its deposit accounts and short term loans to an external benchmark?a)State Bank of India (SBI)b)Canara Bankc)Indian Bankd)Bank of Barodae)None of theseCorrect answer is option 'A'. Can you explain this answer?
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